SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14 (a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under Section 240.14a-12
Peoples Bancorp Inc.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: _________________________________
(2) Form, Schedule or Registration Statement No.: ___________
(3) Filing Party: ___________________________________________
(4) Date Filed: _____________________________________________
Peoples Bancorp Inc.
138 Putnam Street - P.O. Box 738
Marietta, OH 45750
March 21, 2007
Dear Fellow Shareholders:
Enclosed you will find the following items pertaining to the Annual Meeting
of Peoples Bancorp Inc.'s Shareholders to be held at 10:00 a.m. on Thursday,
April 12, 2007 at the Holiday Inn in Marietta, Ohio:
o Notice of Annual Meeting of Shareholders.
o Peoples Bancorp Inc.'s 2006 Annual Report to Shareholders, which
includes the Annual Report on Form 10-K for the Fiscal Year Ended
December 31, 2006.
o Proxy Card.
o Return Envelope.
The proxy card solicits your vote on the election of four directors. It
is important that your proxy card be signed, dated, and returned promptly in the
enclosed envelope in the next few days.
I hope that you will consider attending our annual meeting. We continue
to be active in our pursuit of enhanced shareholder value. On behalf of our
directors and staff, thank you for your continued support.
Sincerely,
/s/ MARK F. BRADLEY
Mark F. Bradley
President and Chief Executive Officer
Peoples Bancorp Inc.
138 Putnam Street - P.O. Box 738
Marietta, OH 45750
Telephone: 740-374-6163
www.peoplesbancorp.com
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
PEOPLES BANCORP INC.
Marietta, Ohio
March 21, 2007
Dear Fellow Shareholders:
The Annual Meeting of Shareholders (the "Annual Meeting") of Peoples
Bancorp Inc. ("Peoples") will be held at 10:00 a.m., Eastern Daylight Savings
Time, on Thursday, April 12, 2007, in the Ball Room of the Holiday Inn, 701 Pike
Street in Marietta, Ohio (Interstate 77, Ohio exit 1), for the following
purposes:
1. To elect the following directors for terms of three years each:
Nominee Term Expires In
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David L. Mead (for re-election) 2010
Robert W. Price (for re-election) 2010
Paul T. Theisen (for re-election) 2010
Thomas J. Wolf (for re-election) 2010
2. To transact any other business which properly comes before the Annual Meeting
or any adjournment thereof.
If you were a shareholder of record at the close of business on
February 12, 2007, you will be entitled to vote in person or by proxy at the
Annual Meeting.
You are cordially invited to attend the Annual Meeting. Your vote is
important, regardless of the number of common shares you own. Whether or not you
plan to attend the Annual Meeting in person, please sign, date and return your
proxy card in the enclosed envelope at your earliest convenience.
Peoples' 2006 Annual Report to Shareholders, which includes the Annual
Report on Form 10-K for the Fiscal Year Ended December 31, 2006, accompanies
this notice and proxy statement.
By Order of the Board of Directors,
/s/ RHONDA L. MEARS
Rhonda L. Mears
Corporate Secretary
Table of Contents
PEOPLES BANCORP INC.
PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLERS
To Be Held April 12, 2007
PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLERS 1
GENERAL INFORMATION 1
Mailing 1
SHAREHOLDER PROPOSALS FOR 2008 ANNUAL MEETING 1
VOTING INFORMATION 2
Who can vote at the Annual Meeting 2
How do I vote? 2
How will my common shares be voted? 2
May I revoke my proxy? 2
What is the quorum requirement for the Annual Meeting? 2
What if my common shares are held in "street name"? 3
What if my common shares are held through the Peoples Bancorp Inc. Retirement Savings Plan? 3
Who pays the cost of proxy solicitation? 3
What vote is required to approve the proposal presented at the Annual Meeting? 3
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 4
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE 7
TRANSACTIONS WITH RELATED PERSONS 8
PROPOSAL NUMBER 1: ELECTION OF DIRECTORS 8
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD 11
Independence of Directors 11
Leadership Director and Executive Sessions 12
Meetings of the Board and Attendance at Annual Meetings of Shareholders 12
Committees of the Board 13
Audit Committee 13
Compensation Committee 14
Executive Committee 14
Governance and Nominating Committee 14
NOMINATING PROCEDURES 16
SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS 17
EXECUTIVE COMPENSATION: COMPENSATION DISCUSSION AND ANALYSIS 18
Overview of Compensation Program 18
Compensation Philosophy and Objectives 18
Role of Executive Officers in Compensation Decisions 18
Setting Executive Compensation 18
2006 Executive Compensation Components 19
Base Salary 19
Annual Cash Incentives 19
Long-Term Equity-Based Incentive Compensation 21
Retirement and Other Benefits 23
Perquisites and Other Personal Benefits 24
Tax and Accounting Implications 25
Deductibility of Executive Compensation 25
Non-qualified Deferred Compensation 25
Accounting for Equity-Based Compensation 25
COMPENSATION COMMITTEE REPORT 25
SUMMARY COMPENSATION TABLE FOR 2006 26
GRANTS OF PLAN-BASED AWARDS FOR 2006 27
OUTSTANDING EQUITY AWARDS AT YEAR-END FOR 2006 28
OPTION EXERCISES AND STOCK VESTED FOR 2006 29
PENSION BENEFITS FOR 2006 30
NON-QUALIFIED DEFERRED COMPENSATION FOR 2006 30
OTHER POTENTIAL POST EMPLOYMENT PAYMENTS 31
Payments Made Upon Termination 31
Payments Made Upon Retirement 31
Payments Made Upon Death or Disability 31
Payments Made Upon a Change in Control 31
DIRECTOR COMPENSATION 34
Cash Compensation Paid to Board Members 34
Equity-based Compensation 34
Deferred Compensation Plan for Non-Employee Directors 35
All Other Compensation 36
DIRECTOR COMPENSATION FOR 2006 36
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION 37
AUDIT COMMITTEE REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006 37
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 38
Fees 38
Pre-Approval Policy 38
HOUSEHOLDING OF ANNUAL MEETING MATERIALS 39
OTHER MATTERS 39
PEOPLES BANCORP INC.
138 Putnam Street
P.O. Box 738
Marietta, Ohio 45750-0738
(740) 374-6136
www.peoplesbancorp.com
PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 12, 2007
GENERAL INFORMATION
We are sending you this proxy statement and the enclosed proxy card
because the Board of Directors of Peoples Bancorp Inc. ("Peoples") is soliciting
your proxy to vote at the Annual Meeting of Shareholders (the "Annual Meeting"),
to be held on Thursday, April 12, 2007, at 10:00 a.m., Eastern Daylight Savings
Time, or at any adjournment thereof. The Annual Meeting will be held in the Ball
Room of the Holiday Inn, 701 Pike Street in Marietta, Ohio (Interstate 77, Ohio
exit 1). This proxy statement summarizes information that you will need in order
to vote.
Peoples has four wholly-owned subsidiaries, Peoples Bank, National
Association ("Peoples Bank"), Peoples Investment Company, PEBO Capital Trust I
and PEBO Capital Trust II. Peoples Bank also owns an insurance agency
subsidiary, Peoples Insurance Agency, Inc., and two asset management
subsidiaries, PBNA, L.L.C., and Peoples Loan Services, Inc. Peoples Investment
Company also owns a capital management subsidiary, Peoples Capital Corporation.
In 2003, Peoples established Peoples Bancorp Foundation, Inc., as an independent
charitable foundation to provide financial assistance and grants to local
organizations.
Mailing
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We mailed this proxy statement and the accompanying proxy card on or
about March 21, 2007, to all shareholders entitled to vote their common shares
at the Annual Meeting. We also sent with this proxy statement Peoples' 2006
Annual Report to Shareholders, which includes the Annual Report on Form 10-K for
the Fiscal Year Ended December 31, 2006 (the "2006 Annual Report"). Additional
copies of the 2006 Annual Report may be obtained, without charge, upon written
request to: Rhonda L. Mears, Corporate Secretary, 138 Putnam Street, P.O. Box
738, Marietta, Ohio 45750-0738. Peoples' Annual Report on Form 10-K for the
Fiscal year Ended December 31, 2006 is posted in the "Company Information SEC
Filings Updated" section of the "Investors Relations" page of Peoples' website
at www.peoplesbancorp.com and is also on file with the Securities and Exchange
Commission (the "SEC") and available on the SEC's website at www.sec.gov.
SHAREHOLDER PROPOSALS
FOR 2008 ANNUAL MEETING
Proposals by shareholders intended to be presented at the 2008 Annual
Meeting of Shareholders (the "2008 Annual Meeting") must be received by the
Corporate Secretary of Peoples no later than November 22, 2007 to be eligible
for inclusion in Peoples' proxy, notice of meeting and proxy statement relating
to the 2008 Annual Meeting. Peoples will not be required to include in its
proxy, notice of meeting or proxy statement a shareholder proposal that is
received after that date or that otherwise fails to meet the requirements for
shareholder proposals established by applicable SEC rules.
The SEC has promulgated rules relating to the exercise of discretionary
voting authority under proxies solicited by the Board of Directors. If a
shareholder intends to present a proposal at the 2008 Annual Meeting without
inclusion of that proposal in Peoples' proxy materials, and does not notify the
Corporate Secretary of Peoples of the proposal by February 5, 2008 or if Peoples
meets other requirements of the applicable SEC rules, the proxies solicited by
the Board of Directors for use at the 2008 Annual Meeting will confer
discretionary authority to vote on the proposal should it then be raised at the
2008 Annual Meeting. In each case, written notice must be given to Peoples'
Corporate Secretary, at the following address: Peoples Bancorp Inc., 138 Putnam
Street, P.O. Box 738, Marietta, Ohio 45750-0738.
Shareholders desiring to nominate candidates for election as directors
at the 2008 Annual Meeting must follow the procedures described in "THE BOARD OF
DIRECTORS AND COMMITTEES OF THE BOARD - Nominating Procedures."
VOTING INFORMATION
Who can vote at the Annual Meeting?
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Only shareholders of record at the close of business on February 12,
2007 are entitled to receive notice of and to vote at the Annual Meeting. At the
close of business on February 12, 2007, there were 10,647,061 common shares
outstanding and entitled to vote. Each common share entitles the holder thereof
to one vote on each matter to be voted upon at the Annual Meeting. There is no
cumulative voting with respect to the election of directors.
How do I vote?
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Whether or not you plan to attend the Annual Meeting, we urge you to
vote in advance by proxy. To do so, you may complete, sign and date the enclosed
proxy card and return it in the envelope provided.
If you plan to attend the Annual Meeting and vote in person, we will
give you a ballot when you arrive. If your common shares are held in the name of
your broker/dealer, your financial institution or another record holder, you
must bring an account statement or letter from that broker/dealer, financial
institution or other holder of record authorizing you to vote on behalf of such
record holder. The account statement or letter must show that you were the
direct or indirect beneficial owner of the common shares on February 12, 2007,
the record date for voting at the Annual Meeting.
How will my common shares be voted?
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Those common shares represented by properly executed proxy cards that
are received prior to the Annual Meeting and not subsequently revoked will be
voted in accordance with your instructions by your "proxy" (one of the
individuals named on your proxy card). If you submit a valid proxy card prior to
the Annual Meeting but do not complete the voting instructions on the proxy
card, your proxy will vote your common shares as recommended by the Board of
Directors, as follows:
"FOR" the election as directors of the nominees listed below under
"PROPOSAL NUMBER 1: ELECTION OF DIRECTORS."
If any other matters are properly presented for voting at the Annual
Meeting, the persons named as proxies on the enclosed proxy card will vote on
those matters, to the extent permitted by applicable law, in accordance with
their best judgment.
May I revoke my proxy?
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Yes. You may change your mind after you send in your proxy card by
following any one of the following three procedures. To revoke your proxy:
o Send in another signed proxy card with a later date, which must be
received by Peoples prior to the Annual Meeting;
o Send written notice revoking your proxy to the Corporate Secretary of
Peoples at 138 Putnam Street, P.O. Box 738, Marietta, Ohio 45750-0738,
which must be received prior to the Annual Meeting; or
o Attend the Annual Meeting and revoke your proxy in person if your
common shares are held in your name. If your common shares are held in
the name of your broker/dealer, your financial institution or another
holder of record and you wish to revoke your proxy in person, you must
bring an account statement or letter from the broker/dealer, financial
institution or other holder of record indicating that you were the
beneficial owner of the common shares on February 12, 2007, the record
date for voting.
o Attendance at the Annual Meeting will not, by itself, revoke your
proxy.
What is the quorum requirement for the Annual Meeting?
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Under Peoples' Code of Regulations, a quorum is a majority of the
common shares outstanding. Common shares may be present in person or represented
by proxy at the Annual Meeting. Both abstentions and broker non-votes are
counted as present for purposes of determining the presence of a quorum.
Generally, broker non-votes occur when common shares held by a broker/dealer for
a beneficial owner are not voted with respect to a particular proposal because
the broker/dealer has not received voting instructions from the beneficial owner
and the broker/dealer lacks discretionary voting power to vote such common
shares. Broker/dealers have discretionary authority to vote their clients'
common shares on "routine" proposals, such as the uncontested election of
directors, even if they do not receive voting instructions from their clients.
They cannot, however, vote their clients' common shares on other "non-routine"
matters without instructions from their clients.
What if my common shares are held in "street name"?
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If you hold your common shares in "street name" with a broker/dealer,
financial institution or other holder of record, you should review the
information provided to you by such holder of record. This information will set
forth the procedures you need to follow in instructing the holder of record how
to vote your "street name" common shares and how to revoke previously given
instructions. If you hold your common shares in "street name," you may be
eligible to appoint your proxy electronically via the Internet or telephonically
and may incur costs associated with the electronic access or telephone usage.
What if my common shares are held through the Peoples Bancorp Inc. Retirement
Savings Plan?
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If you participate in the Peoples Bancorp Inc. Retirement Savings Plan
(the "Retirement Savings Plan") and common shares have been allocated to your
account in the Retirement Savings Plan, you will be entitled to instruct the
trustee of the Retirement Savings Plan how to vote those common shares. If you
are such a participant, you may receive your proxy card separately. If you give
no voting instructions to the trustee of the Retirement Savings Plan, the
trustee will not vote the common shares allocated to your account under the
Retirement Savings Plan.
Who pays the cost of proxy solicitation?
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Peoples will pay the costs of soliciting proxies on behalf of the Board
of Directors other than the Internet access and telephone usage charges if a
proxy is appointed electronically through a holder of record. Although we are
soliciting proxies by mailing these proxy materials, directors, officers and
employees of Peoples and our subsidiaries also may solicit proxies by further
mailings, telephone, facsimile or personal contact without receiving any
additional compensation for such solicitations. Peoples will also reimburse our
transfer agent, broker/dealers, voting trustees, financial institutions and
other custodians, nominees and fiduciaries for their reasonable costs in
forwarding the proxy materials to the beneficial shareholders.
What vote is required to approve the proposal presented at the Annual Meeting?
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Under Ohio law and Peoples' Code of Regulations, the four nominees for
election as directors in the class whose terms will expire in 2010 receiving the
greatest number of votes "FOR" election will be elected as directors. Common
shares as to which the authority to vote is withheld will be counted for quorum
purposes but will not affect whether a nominee has received sufficient votes to
be elected.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 12, 2007 (except as
otherwise noted), certain information concerning the beneficial ownership of
common shares by the only persons known by Peoples to be the beneficial owner of
more than 5% of our outstanding common shares:
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership Percent of Class (1)
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Peoples Bank - Trustee
138 Putnam Street
P.O. Box 738
Marietta, OH 45750-0738 1,032,664 (2) 9.70%
Franklin Resources, Inc.
Charles B. Johnson
Rupert H. Johnson, Jr.
Franklin Advisory Services, LLC
One Franklin Parkway
San Mateo, CA 94403-1906 960,847 (3) 9.02%
Dimensional Fund Advisors LP
1299 Ocean Avenue
Santa Monica, CA 90401 729,342 (4) 6.85%
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(1) The "Percent of Class" computation is based on 10,647,061 common
shares outstanding on February 12, 2007.
(2) Includes Peoples Bank's beneficial ownership through Peoples Financial
Advisors, a division of Peoples Bank, in the following manner: 169,235
common shares with shared investment and sole voting power; 606,953
common shares with shared investment and voting power; 207,661 common
shares with sole voting and investment power; and 48,815 common shares
with sole investment and shared voting power. The officers and
directors of Peoples Bank and Peoples disclaim beneficial ownership of
the common shares beneficially owned by Peoples Bank through Peoples
Financial Advisors.
(3) Based on information contained in a Schedule 13G amendment, dated
January 31, 2007, filed with the SEC on February 6, 2007 on behalf of
Franklin Resources, Inc., Charles B. Johnson, Rupert H. Johnson, Jr.,
and Franklin Advisory Services, LLC to report beneficial ownership of
common shares of Peoples as of December 31, 2006. These common shares
are reported to be beneficially owned by one or more open or closed-end
investment companies or other managed accounts which are advised by
Franklin Advisory Services, LLC or Franklin Templeton Portfolio
Advisors, Inc., which are investment adviser subsidiaries of Franklin
Resources, Inc. The advisory contracts generally grant to the
respective investment adviser subsidiary all voting and/or investment
power over the common shares owned by the advisory clients. However,
the Schedule 13G amendment reports that to the extent that the
underlying client under a managed account investment management
arrangement advised by Franklin Templeton Portfolio Advisors, Inc. has
retained voting power over any common shares, Franklin Templeton
Portfolio Advisors, Inc. disclaims any power to vote or direct the vote
of such common shares. The Schedule 13G amendment reports that Franklin
Advisory Services, LLC had sole voting power as to 953,647 common
shares and sole investment power as to 959,647 common shares and that
Franklin Templeton Portfolio Advisors, Inc. had sole voting (except as
previously noted) and sole investment power as to 1,200 common shares.
For purposes of the reporting requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), Charles B. Johnson and
Rupert H. Johnson, Jr. are reported to be the principal stockholders of
Franklin Resources, Inc. and together with Franklin Resources, Inc.
each may be deemed to be, for purposes of Rule 13d-3 under the Exchange
Act, the beneficial owner of the common shares held by persons and
entities advised by the investment adviser subsidiaries of Franklin
Resources, Inc. However, each of Franklin Resources, Inc., Charles B.
Johnson, Rupert H. Johnson, Jr., Franklin Advisory Services, LLC and
Franklin Templeton Portfolio Advisors, Inc. expressly disclaimed any
pecuniary interest or beneficial ownership in any of the common shares
covered by the Schedule 13G amendment and they believe they are not a
"group" within the meaning of Rule 13d-5 under the Exchange Act.
(4) Based on information contained in a Schedule 13G amendment, dated
February 1, 2007, filed with the SEC on February 9, 2007 on behalf of
Dimensional Fund Advisors LP to report beneficial ownership of common
shares of Peoples as of December 31, 2006. The Schedule 13G amendment
reported that Dimensional Fund Advisors LP had sole voting and
investment power as to 729,342 common shares, all of which were held in
portfolios of four registered investment companies to which Dimensional
Fund Advisors LP furnishes investment advice and of other commingled
group trusts and separate accounts for which Dimensional Fund Advisors
LP serves as investment manager. The common shares reported were owned
by the investment companies, trusts and accounts. In its role as
investment adviser or investment manager, Dimensional Fund Advisors LP
was reported to possess both sole voting power and sole investment
power as to the common shares held in the portfolios of these
investment companies, trusts and accounts. Dimensional Fund Advisors LP
disclaimed beneficial ownership of the reported common shares.
The following table sets forth, as of February 12, 2007, certain
information with respect to the common shares beneficially owned by each current
director of Peoples, by each nominee for election as a director of Peoples, by
each individual named in the Summary Compensation Table and by all current
executive officers and directors of Peoples as a group:
Amount and Nature of Beneficial Ownership (1)
Common Shares Which Can Be
Acquired Upon Exercise of
Options Currently Exercisable
Name of Common Shares or Options First Becoming
Beneficial Owner Presently Held Exercisable Within 60 Days Total Percent of Class (2)
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Carl L. Baker, Jr. 69,900 (3) 7,984 77,884 (4)
Mark F. Bradley (5) 6,422 (6) 24,829 31,251 (4)
George W. Broughton 180,094 (7) 4,665 184,759 1.74%
Frank L. Christy 96,117 (8) 7,298 103,415 (4)
John W. Conlon 20,865 (9) - 20,864 (4)
Wilford D. Dimit 49,084(10) 12,210 61,294 (4)
Richard Ferguson 100(11) 2,355 2,455 (4)
Larry E. Holdren (5) 23,589(12) 31,741 55,330 (4)
Donald J. Landers (5) - 2,659 2,659 (4)
David L. Mead 1,000(13) 600 1,600 (4)
Robert W. Price 13,945(14) 5,820 19,765 (4)
Theodore P. Sauber 129,588(15) 2,355 131,943 1.24%
Carol A. Schneeberger (5) 21,340(16) 18,051 39,391 (4)
Paul T. Theisen 23,625(17) 9,280 32,905 (4)
Joseph H. Wesel 37,750(18) 12,351 50,101 (4)
Thomas J. Wolf 20,000(19) 3,510 23,510 (4)
Joseph S. Yazombek (5) 39,489(20) 33,042 72,531 (4)
All current directors and
executive officers as
a group (numbering 17) 737,366(21) 181,175 918,541 8.49%
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(1) Unless otherwise indicated in the footnotes to this table, the
beneficial owner has sole voting and investment power with respect to
all of the common shares reflected in the table. All fractional common
shares have been rounded to the nearest whole common share. The mailing
address of each of the current executive officers and directors of
Peoples is 138 Putnam Street, P.O. Box 738, Marietta, Ohio 45750-0738.
(2) The "Percent of Class" computation is based on the sum of (i)
10,647,061 common shares outstanding on February 12, 2007 and (ii) the
number of common shares as to which the named individual or group has
the right to acquire beneficial ownership upon the exercise of options
which are currently exercisable or will first become exercisable within
60 days after February 12, 2007.
(3) Includes 2,447 common shares held in an investment account by Carl L.
Baker, Jr., as to which Mr. Baker exercises sole voting and investment
power. Includes 6,352 common shares held by B & N Coal, Inc., as to
which Mr. Baker exercises shared voting and investment power. Also
includes 6,943 common shares held by Mr. Baker as Trustee of the
Gilbert Baker Trust, as to which Mr. Baker exercises sole voting and
investment power and 41,787 common shares held by Mr. Baker as Trustee
of the Jewell Baker Trust, as to which Mr. Baker exercises sole voting
and investment power. Does not include 257 common shares accrued to Mr.
Baker's account under the Peoples Bancorp Inc. Deferred Compensation
Plan for Directors of Peoples Bancorp Inc. and Subsidiaries (the
"Deferred Compensation Plan for Directors"), as to which Mr. Baker has
no voting or investment power.
(4) Reflects beneficial ownership of less than 1% of the outstanding
common shares.
(5) Executive officer of Peoples during the fiscal year ended December 31,
2006 (the "2006 fiscal year") and named in the Summary Compensation
Table. Mark F. Bradley also serves as a director of Peoples.
(6) Does not include 1,453 common shares accrued to Mark F. Bradley's
account under the Deferred Compensation Plan for Directors, as to which
Mr. Bradley has no voting or investment power. Includes 5,102 common
shares allocated to the account of Mr. Bradley in the Retirement
Savings Plan, as to which Mr. Bradley has the power to direct the
voting and investment.
(7) Includes 7,587 common shares held by George W. Broughton as custodian
for his children, as to which Mr. Broughton has sole voting and
investment power and claims beneficial ownership. Includes 558 common
shares held by Broughton Commercial Properties, LLC, as to which Mr.
Broughton exercises sole voting and investment power. Includes 16,287
common shares held by Mr. Broughton as Trustee of the George W.
Broughton and Nancy R. Broughton Retained Annuity Trust, as to which
Mr. Broughton has shared voting and investment power. Includes 13,374
common shares held in an IRA account by Peoples Bank as custodian, as
to which Mr. Broughton exercises sole voting and investment power. Does
not include 16,333 common shares held of record and beneficially owned
by Mr. Broughton's wife, as to which Mr. Broughton has no voting or
investment power and disclaims beneficial ownership. Does not include
1,270 common shares accrued to Mr. Broughton's account under the
Deferred Compensation Plan for Directors, as to which Mr. Broughton has
no voting or investment power. As of February 12, 2007, 558 common
shares held by Broughton Commercial Properties, LLC and 41,815 common
shares held by Mr. Broughton had been pledged as security.
(8) Includes 7,020 common shares held in the Frank L. Christy Investment
Agency Account and 70,115 common shares held in the Riverbank
Restaurants Inc. Agency Account at Peoples Bank, as to which Mr.
Christy exercises shared voting and investment power. Also includes 979
common shares held in an investment account by Mr. Christy, as to which
Mr. Christy exercises sole voting and investment power. Also includes
3,232 common shares held by Mr. Christy as Co-Trustee of the Helen G.
Christy Trust, as to which Mr. Christy exercises shared voting and
investment power, and 14,771 common shares held by Mr. Christy as
Co-Trustee of the F. Leonard Christy Trust, as to which Mr. Christy
exercises shared voting and investment power.
(9) John W. Conlon served as Chief Financial Officer and Treasurer during
the 2006 fiscal year. Mr. Conlon retired effective August 1, 2006. Does
not include 10 common shares held of record and beneficially owned by
Mr. Conlon's wife, as to which Mr. Conlon has no voting or investment
powers and disclaims beneficial ownership.
(10) Includes 20,426 common shares held in the Wilford D. Dimit Trust
Investment Account at Peoples Bank, as to which Mr. Dimit exercises
shared voting or investment power with Peoples Bank. Also includes
28,658 common shares held in the Marjorie E. Dimit Trust Investment
Account at Peoples Bank, as to which Wilford D. Dimit exercises shared
voting or investment power with Peoples Bank. Does not include 20,405
common shares accrued to Mr. Dimit's account under the Deferred
Compensation Plan for Directors, as to which Mr. Dimit has no voting or
investment power.
(11) Includes 100 common shares allocated to the account of Richard Ferguson
in the Ferguson Consulting, LLC retirement savings plan, as to which
Mr. Ferguson has the power to direct the voting and investment. Does
not include 1,880 common shares accrued to Mr. Ferguson's account under
the Deferred Compensation Plan for Directors, as to which Mr. Ferguson
has no voting or investment power.
(12) Includes 6,807 common shares held jointly by Larry E. Holdren with his
wife, as to which Mr. Holdren exercises shared voting and investment
power. Includes 16,782 common shares allocated to the account of Mr.
Holdren in the Retirement Savings Plan, as to which Mr. Holdren has the
power to direct the voting and investment.
(13) Includes 1,000 common shares held in an investment account by David L.
Mead, as to which Mr. Mead exercises sole voting and investment power.
Does not include 475 common shares accrued to Mr. Mead's account under
the Deferred Compensation Plan for Directors, as to which Mr. Mead has
no voting or investment power.
(14) Includes 10,957 common shares held in the Robert W. Price Investment
Account, as to which Mr. Price exercises sole investment and voting
power. Does not include 3,844 common shares accrued to Mr. Price's
account under the Deferred Compensation Plan for Directors, as to which
Mr. Price has no voting or investment power.
(15) Includes 56,173 common shares held in the Carol J. Sauber Trust Account
at Peoples Bank, as to which Theodore P. Sauber exercises shared
investment and voting power with Peoples Bank. Includes 65,294 common
shares held in the Theodore P. Sauber Trust Account at Peoples Bank, as
to which Mr. Sauber exercises shared investment and voting power with
Peoples Bank. Includes 8,121 common shares held in an IRA account by
Peoples Bank as custodian, as to which Mr. Sauber exercises shared
investment and voting power with Peoples Bank.
(16) Includes 6,950 common shares held jointly by Carol A. Schneeberger with
her husband, as to which Ms. Schneeberger exercises shared voting and
investment power. Includes 10,412 common shares allocated to the
account of Ms. Schneeberger in the Retirement Savings Plan, as to which
Ms. Schneeberger has the power to direct the voting and investment.
(17) Does not include 5,748 common shares accrued to Paul T. Theisen's
account under the Deferred Compensation Plan for Directors, as to which
Mr. Theisen has no voting or investment power.
(18) Does not include 14,879 common shares held in the Luada Wesel Estate
Plan Trust Investment Account at Peoples Bank, as to which: (i) Joseph
H. Wesel has no voting or investment power and disclaims beneficial
ownership and (ii) Peoples Bank shares voting and investment power with
Luada Wesel. Does not include 7,845 common shares accrued to Mr.
Wesel's account under the Deferred Compensation Plan for Directors, as
to which Mr. Wesel has no voting or investment power. Does not include
22,786 common shares in the Joseph and Lu Wesel Grandchildren's Trust,
as to which Peoples Bank has sole investment and voting power.
(19) As of February 12, 2007, 20,000 common shares held by Mr. Wolf had
been pledged as security.
(20) Includes 25,421 common shares held jointly by Joseph S. Yazombek and
his wife, as to which Mr. Yazombek exercises shared voting and
investment power. Includes 14,067 common shares allocated to the
account of Mr. Yazombek in the Retirement Savings Plan, as to which Mr.
Yazombek has the power to direct the voting and investment.
(21) Includes common shares held jointly by current directors and executive
officers with other persons, as well as 46,211 common shares allocated
to the accounts of all current executive officers of Peoples in the
Retirement Savings Plan. See notes (3), (6) through (8) and (10) though
(20) above.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that Peoples' directors,
executive officers and greater-than-10% beneficial owners file reports with the
SEC reporting their initial beneficial ownership of common shares and any
subsequent changes in their beneficial ownership. Specific due dates have been
established by the SEC, and Peoples is required to disclose in this proxy
statement any late reports. To Peoples' knowledge, based solely on a review of
reports furnished to Peoples and written representations that no other reports
were required, during the 2006 fiscal year, all Section 16(a) filing
requirements applicable to Peoples' executive officers, directors and
greater-than-10% beneficial owners were complied with, except:
o Carl L. Baker, Jr. filed late one Form 4 reporting the acquisition of
common shares by Mr. Baker as Trustee of the Jewell Baker Trust (which
occurred on November 14, 2006 and was reported on February 26, 2007).
o Frank L. Christy filed late one Form 4 reporting the acquisition of
common shares, occurring in two separate transactions, by Mr. Christy
as Co-Trustee of the Helen G. Christy Trust and the F. Leonard Christy
Trust (which occurred on February 1, 2006); the disposition of common
shares, occurring in 12 separate transactions, held by Mr. Christy as
Co-Trustee of the Helen G. Christy Trust (which occurred from May 17,
2006 to November 29, 2006); and, the receipt of gifts of common shares
(which occurred on March 18, 2004 and July 9, 2004), all of which were
reported on February 26, 2007.
o John W. Conlon filed late one Form 4 reporting the disposition of
common shares held in the Retirement Savings Plan account of Mr.
Conlon's wife (which occurred on February 2, 2006, and was reported on
April 11, 2006).
o Wilford D. Dimit filed late one Form 4 reporting the private purchase
of common shares (which occurred on May 13, 2005, and was reported on
February 13, 2007).
o Paul T. Theisen filed late one Form 4 reporting the gift of common
shares (which occurred on December 1, 2004, and was reported on
February 13, 2007).
o Thomas J. Wolf filed late one Form 4 reporting the disposition of
common shares (which occurred on December 28, 2004, and was reported
on February 26, 2007).
TRANSACTIONS WITH RELATED PERSONS
During the 2006 fiscal year, Peoples Bank entered into lending
relationships with certain executive officers and directors of Peoples, with
members of their immediate families and with corporations or organizations as to
which directors of Peoples serve as executive officers or beneficially own more
than 10% of the equity securities. All such loans were made in the ordinary
course of business, were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
loans with persons not related to Peoples or Peoples Bank, and did not involve
more than the normal risk of collectibility or present other unfavorable
features to Peoples or Peoples Bank.
The above loans were subject to Peoples Bank's written policies,
procedures and standard underwriting criteria applicable to loans generally, as
well as made in accordance with Federal Reserve Regulation O requiring prior
approval of the Board of Directors of Peoples Bank.
Effective January 1, 2006, David T. Wesel, son of Joseph H. Wesel,
director and Chairman of the Board of Peoples, assumed the positions of
Executive Vice President of Peoples and of Peoples Bank, as well as President of
Peoples Financial Advisors, a division of Peoples Bank. Prior to that time,
David T. Wesel had served as Vice President of Peoples Bank and Sales Manager of
Peoples Financial Advisors, but was not an executive officer of either Peoples
or Peoples Bank. David T. Wesel's annual base salary for the 2006 fiscal year
was $150,000. Joseph H. Wesel does not serve as a member of Peoples'
Compensation Committee.
Pursuant to its Policy Manual, familial relationships are reviewed by
the Human Resources department to safeguard an employee against direct or
indirect influence by an employed relative. Management succession plans, such as
above, are reviewed by the Compensation Committee under its written charter, and
recommended to Peoples' Board of Directors for approval.
PROPOSAL NUMBER 1:
ELECTION OF DIRECTORS
As of the date of this proxy statement, there were 12 members of the
Board of Directors - four directors in the class whose terms expire at the
Annual Meeting, four in the class whose terms expire in 2008 and four in the
class whose terms expire in 2009.
On September 14, 2006, upon the recommendation of the Governance and
Nominating Committee and as permitted by Section 2.02(c) of Peoples' Code of
Regulations, the Board of Directors of Peoples increased the number of directors
from eleven to twelve and elected David L. Mead to fill the vacancy created by
the increase and to serve in the class whose terms expire at the Annual Meeting.
Mr. Mead was recommended to the Governance and Nominating Committee by the
Leadership Director.
The Board of Directors proposes that each of the four nominees
identified below be re-elected for a new three-year term and until his successor
is duly elected and qualified or until his earlier resignation, removal from
office or death. The Governance and Nominating Committee recommended each
nominee for re-election. The four nominees for election as directors in the
class whose terms expire in 2010 receiving the greatest number of votes will be
elected. Common shares represented by properly executed and returned proxy cards
will be voted as specified or, if no instructions are given, "FOR" the election
of the Board of Directors' nominees.
The following table gives certain information, as of February 12, 2007,
concerning each nominee for re-election as a director of Peoples. Unless
otherwise indicated, each individual has had the same principal occupation for
more than five years.
THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE ELECTION OF ALL NOMINEES LISTED BELOW.
Director Nominee
Position(s) Held with Peoples and Our Continuously For Term
Nominee Age Principal Subsidiaries and Principal Occupation(s) Since Expiring In
------- --- -------------------------------------------------- ------------ -----------
David L. Mead 51 Vice President for Business Affairs, Otterbein College, 2006 2010
located in Westerville, Ohio since September 2006.
Associate Professor of Finance, Marietta College,
located in Marietta, Ohio from August 2004 to September
2006. Chief Financial Officer and Treasurer of First
Place Financial Corp headquartered in Warren, Ohio from
December 2002 to June 2004. Treasurer of First Place
Bank from May 2002 to December 2002. (1)
Robert W. Price 43 General Manager, Shelly Materials, Inc., Findlay 2000 2010
District, a division of The Shelly Company, since 2002.
The Shelly Company is an asphalt and construction
materials company headquartered in Thornville, Ohio, and
a wholly-owned subsidiary of Oldcastle Materials Group,
a division of CRH, plc. Formerly President of Smith
Concrete and related companies.
Paul T. Theisen 76 Attorney-At-Law. Currently active as a mediator and 1980 2010
arbitrator. For more than 40 years, was a litigator
with TheisenBrock, A Legal Professional Association,
Marietta, Ohio, and has been Of Counsel to, and an
independent contractor with, that firm since 1998. Vice
Chairman of the Board since June 2005, and Leadership
Director since December 2005, of Peoples. (1)
Thomas J. Wolf 60 President of seven holding companies for 13 McDonald's 2004 2010
restaurants in Kentucky and West Virginia. Chairman of
the Board for Fifth Avenue Broadcasting Co., Inc., a
holding company for 4 radio stations in Huntington, WV.
Board member of each of Our Lady of Bellefonte Hospital
in Ashland, Kentucky, since 2002, the Ashland Alliance
(chamber of commerce for Boyd and Greenup Counties,
Kentucky), since 2002, and the Ronald McDonald House in
Huntington, West Virginia, since 1998.
----------------------------
(1) Also a director of Peoples Bank.
While it is contemplated that all nominees will stand for re-election,
if one or more nominees at the time of the Annual Meeting should be unavailable
or unable to serve as a candidate for re-election as a director, the individuals
designated as proxies on the proxy card will have full discretion to vote the
common shares represented by the proxies they hold for the election of the
remaining nominees and for the election of any substitute nominee or nominees
designated by the Board of Directors following recommendation by the Governance
and Nominating Committee. The Board of Directors knows of no reason why any of
the nominees named above would be unavailable or unable to serve if elected to
the Board.
The following table gives certain information, as of February 12, 2007,
concerning the current directors who will continue to serve after the Annual
Meeting. Unless otherwise indicated, each individual has had the same principal
occupation for more than five years.
Director
Position(s) Held with Peoples and Our Continuously Term
Name Age Principal Subsidiaries and Principal Occupation(s) Since Expiring In
---- --- -------------------------------------------------- ----- -----------
Carl L. Baker, Jr. 44 President and Chief Executive Officer, B & N Coal, Inc., 2000 2009
a mining, reclamation and construction concern in
southeastern Ohio. Co-Owner of Sharon Stone Company, a
limestone and slag producer in Noble and Washington
Counties, Ohio. Owner of Dexter Hardwoods, Inc., a
hardwood sawmill located in Noble County, Ohio. Partner
in Belpre Sand & Gravel Company, a sand and gravel
operation located in Little Hocking, Washington County,
Ohio, since 2002.
Mark F. Bradley 37 Chief Executive Officer since May 2005, President since 2003 2008
June 2004, Chief Operating Officer from July 2003 to May
2005, Director since February 2003, Executive Vice
President and Chief Integration Officer from February
2001 to July 2003, and Controller from 1997 to 2001, of
Peoples and Peoples Bank. Chief Executive Officer since
May 2005, President since 2002, Chief Operating Officer
from 2002 to May 2005, and Controller from 1997 to 2001,
of Peoples Bank. Director of Peoples Bancorp Foundation,
Inc. since December 2003. President since January 2006
and a Director since January 2004 of Peoples Insurance
Agency, Inc. (1)
George W. Broughton 49 President of GWB Specialty Foods, LLC, an ice cream, 1994 2009
frozen food, and coffee service distributor. President of
Broughton Commercial Properties, LLC, a commercial
properties rental company. Chairman of Broughton
Foundation, a nonprofit charitable foundation, and
Broughton Park, a park facility owned by the Broughton
Foundation and made available to the public. President
and Controller of George Broughton Family LLP, an asset
management company. Owner of GWB Oil & Gas LLC, an
independent oil and gas producing company. All of these
entities are based in Marietta, Ohio. Director of
Peoples Bancorp Foundation, Inc. since December 2003. (1)
Frank L. Christy 59 President of Christy & Associates, Inc., a business 1999 2008
development company located in Marietta, Ohio. President
of Lafayette Center, Inc., owner and operator of a retail
shopping center located in Marietta, Ohio, from January
1988 to December 2005. President of Riverbank
Restaurants, Inc., owner and operator of a lodging
facility located in Charleston, West Virginia. Chairman
of Caron Products and Services, Inc., a manufacturer and
distributor of chillers and incubators for scientific
work, located in Marietta, Ohio. Chairman of Rossi Pasta
Ltd., a manufacturer and distributor of gourmet pasta and
sauce located in Marietta, Ohio.
Wilford D. Dimit 72 President of First Settlement, Inc., Marietta, Ohio, a 1993 2009
corporation operating a retail clothing store for men and
women, a family shoes store, a cosmetic studio and a
public alteration shop from July 1983 to November 2004
and a restaurant from March 1983 to March 2005. (1)
Richard Ferguson 60 Owner of Ferguson Consulting, LLC, a Columbus, Ohio based 2004 2009
professional practice that focuses on business valuations
and forensic accounting services. Certified Public
Accountant since 1976 and Certified Valuation Analyst
since 1996.
Theodore P. Sauber 73 Vice President of T.C.K.S., Inc., a holding company for 2004 2008
McDonald's restaurants in Ohio and West Virginia.
Retired Trustee of Rio Grande University. A member of the
Ohio University Trustees Academy. A member of Service
Corps of Retired Executives (SCORE) of Athens (Ohio).
Past chairman of the Athens (Ohio) Chamber of Commerce.
Director of Peoples Bancorp Foundation, Inc. since
December 2003. (1)
Joseph H. Wesel 77 President of W.D.A., Inc., Marietta, Ohio, a real estate 1980 2008
holding company. Chairman and Chief Executive Officer of
Marietta Automotive Warehouse, Inc., Marietta, Ohio, an
automotive parts wholesaler, from 1978 until December
2006. Chairman of the Board from 1991 until July 2002 and
since June 2005, Leadership Director from July 2003 to
December 2005 and Vice Chairman of the Board from July
2003 to June 2005, of Peoples. (1)
----------------------------
(1) Also a director of Peoples Bank.
Other than the father-son relationship between Joseph H. Wesel, a
director of Peoples, and David T. Wesel, an executive officer of Peoples, there
are no family relationships among any of the directors, nominees for election as
directors and executive officers of Peoples.
Please see Peoples' Annual Report on Form 10-K for the Fiscal Year
Ended December 31, 2006 for information on Peoples' executive officers.
THE BOARD OF DIRECTORS AND
COMMITTEES OF THE BOARD
Independence of Directors
-------------------------
The rules of the NASDAQ Global Select Market (the "NASDAQ Rules")
require that a majority of Peoples' Board of Directors be independent directors.
The definition of an independent director for purposes of the NASDAQ Rules
includes a series of objective criteria, which Peoples has used in determining
whether the member of the Peoples Board of Directors are independent. In
addition, a member of Peoples' Audit Committee will not be considered to be
independent under the applicable NASDAQ Rules if he or she (i) does not satisfy
the independence standards in Rule 10A-3 under the Exchange Act or (ii) has
participated in the preparation of the financial statements of Peoples or any of
Peoples' current subsidiaries at any time during the past three years.
As required by the NASDAQ Rules, the Board of Directors has made a
subjective determination as to each independent director that no relationships
exist which, in the opinion of the Board, would interfere with such individual's
exercise of independent judgment in carrying out the responsibilities of a
director. In making these determinations, the Board of Directors has reviewed,
considered and discussed each director's business and personal relationships,
both direct and indirect, with Peoples and our subsidiaries and the compensation
and other payments each director and such director's immediate family members
have, both directly and indirectly, received from or made to Peoples and our
subsidiaries and presently expect to receive from or make to Peoples and our
subsidiaries. Based on that review, consideration and discussion, the Board of
Directors has determined that at least a majority of its members qualify as
independent directors. The Board of Directors has determined that each of the
following directors has no financial or personal ties, either directly or
indirectly, with Peoples or our subsidiaries (other than compensation received
in the individual's capacity as a director of Peoples and our subsidiaries,
non-preferential banking relationships in the ordinary course of business with
Peoples Bank and ownership of common shares of Peoples as described in this
proxy statement) and thus qualifies as independent: Carl L. Baker, Jr.; George
W. Broughton; Frank L. Christy; Richard Ferguson; David L. Mead; Robert W.
Price; Theodore P. Sauber; Paul T. Theisen; and Thomas J. Wolf.
While Paul T. Theisen is Of Counsel to, and an independent contractor
with, the law firm of TheisenBrock, Mr. Theisen has not been a partner,
controlling shareholder or executive officer or otherwise been related to or
held any interest in TheisenBrock, other than as Of Counsel and an independent
contractor (and has not individually performed services for Peoples or any of
our subsidiaries), since 1998.
Mark F. Bradley does not qualify as an independent director because he
currently serves as an executive officer of Peoples.
On January 26, 2005, Peoples Bank purchased real estate and the
building located on it from First Settlement, Inc., a corporation as to which
Wilford D. Dimit, a director of Peoples, is the President and a controlling
shareholder. The real estate is contiguous to the main office of Peoples Bank in
Marietta, Ohio. The purchase price for the real estate and building of $400,000
was determined through an arm's length negotiation and was acquired to add
office space necessary for growth of Peoples' operations. The $400,000 purchase
price for the real estate and building represented more than 5% of the
consolidated gross revenues of First Settlement, Inc. for the fiscal year
completed prior to the transactions and more than 5% of its consolidated gross
revenues for the year in which the transaction occurred. From January 26, 2005
through March 31, 2005, Peoples Bank leased to First Settlement, Inc. space
within the building on the first floor on a month-to-month basis for purposes of
continued operation of a restaurant. These lease payments were in the aggregate
amount of $2,000. Mr. Dimit sold the restaurant operations in April 2005. These
transactions were pre-approved by the Board of Directors of Peoples Bank and
have been approved by the Audit Committee of the Board of Directors of Peoples.
The Board of Directors has determined that Wilford D. Dimit does not
qualify as an independent director under applicable NASDAQ Rules due to the
transaction between Peoples Bank and First Settlement, Inc. described above and
will not qualify as an independent director under applicable NASDAQ Rules until
2009. The Board of Directors has determined, however, that those transactions do
not disqualify Mr. Dimit from being independent for purposes of Rule 10A-3 under
the Exchange Act. It was announced at the December 14, 2006 Board of Directors
meeting that Mr. Dimit had resigned as a member of the Audit Committee and
announced at the February 8, 2007 Board of Directors meeting that Mr. Dimit had
resigned as a member of the Governance and Nominating Committee effective
January 25, 2007. Mr. Dimit's Committee seats will remain vacant until 2009,
after the period of time during which applicable NASDAQ Rules prohibit his
independence has expired.
On September 14, 2005, the Board of Directors appointed David T. Wesel
as an executive officer of Peoples and of Peoples Bank, effective January 1,
2006. Joseph H. Wesel is the father of David T. Wesel. The Board of Directors
has determined that due to his relationship to David T. Wesel, Joseph H. Wesel
no longer qualifies as an independent director either under the applicable
NASDAQ Rules or for purposes of Rule 16b-3 under the Exchange Act or Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Internal Revenue
Code"), each of which applies to directors serving on the Compensation
Committee. However, the Board of Directors has determined that Joseph T. Wesel
qualified as an independent director prior to January 1, 2006, the date his son
became an executive officer of Peoples and Peoples Bank.
Leadership Director and Executive Sessions
------------------------------------------
The directors elect a Leadership Director who is responsible for
providing a bridge between the independent directors and Peoples' management.
The Leadership Director presides at all executive sessions of the independent
directors (without management present). The Leadership Director also serves as
the Chairman of the Governance and Nominating Committee of the Board of
Directors. Paul T. Theisen has served as the Leadership Director since December
8, 2005. In accordance with applicable NASDAQ Rules, the independent directors
were given the opportunity to meet in executive session at the end of each Board
of Directors meeting and at such other times as the independent directors deemed
necessary.
Meetings of the Board and Attendance at Annual Meetings of Shareholders
-----------------------------------------------------------------------
The Board of Directors held a total of 12 meetings during the 2006
fiscal year. Each incumbent director attended 88% or more of the aggregate of
the total number of meetings held by the Board of Directors and the total number
of meetings held by all committees of the Board of Directors on which he served,
in each case during his period of service, other than Robert W. Price, who
attended 74% of such meetings.
Peoples encourages all incumbent directors and director nominees to
attend each annual meeting of shareholders. All of the then incumbent directors
and director nominees, who were also directors at the time, attended Peoples'
last annual meeting of shareholders held on April 13, 2006.
Committees of the Board
-----------------------
The Board of Directors has four standing committees: the Audit
Committee, the Compensation Committee, the Executive Committee, and the
Governance and Nominating Committee.
AUDIT COMMITTEE
The Audit Committee was established in accordance with Section
3(a)(58)(A) of the Exchange Act and conducts its business pursuant to a written
charter adopted by the Board of Directors. A current copy of the charter of the
Audit Committee is posted on the "Corporate Governance & Ethics" page of
Peoples' website at www.peoplesbancorp.com. At least annually, the Audit
Committee reviews and reassesses the adequacy of its charter and recommends any
proposed changes to the full Board of Directors for approval. The Audit
Committee is responsible for:
o overseeing the accounting and financial reporting processes of
Peoples;
o overseeing the audits of the consolidated financial statements of
Peoples;
o appointing, compensating and overseeing the work of the independent
registered public accounting firm employed by Peoples for the purpose
of preparing or issuing an audit report or performing related work;
o pre-approving all audit and non-audit services provided by the
independent registered public accounting firm;
o establishing procedures for the receipt, retention and treatment of
complaints received by Peoples regarding accounting, internal
accounting controls or auditing matters;
o assisting the Board of Directors in the oversight of:
o the performance of Peoples' internal auditors and independent
registered public accounting firm,
o the independent registered public accounting firm's
qualifications and independence; and
o Peoples' compliance with ethics policies and legal and regulatory
requirements.
o other responsibilities as may be delegated to the Audit Committee by
the full Board of Directors.
The Audit Committee held five meetings during the 2006 fiscal
year. The Audit Committee's report relating to the 2006 fiscal year appears
beginning on page 37.
The members of the Audit Committee are: Richard Ferguson
(Chairman); Carl L. Baker, Jr.; George W. Broughton; Theodore P. Sauber; and
Thomas J. Wolf, and each served on the Audit Committee throughout the entire
2006 fiscal year. Each member of the Audit Committee qualifies as an independent
director for purposes of Rule 10A-3 under the Exchange Act and under the
applicable NASDAQ Rules. Wilford D. Dimit served on the Audit Committee until
December 14, 2006. Mr. Dimit had served on the Audit Committee pursuant to a
provision in the applicable NASDAQ Rules which permit, under exceptional and
limited circumstances, one member of the Audit Committee to be a director who
does not meet the independence requirements of the applicable NASDAQ Rules, if
(i) that director meets the criteria of Rule 10A-3 under the Exchange Act and is
not a current officer or employee of Peoples or any of our subsidiaries (or a
family member of such an officer or employee) and (ii) the Board of Directors
has determined that such director's committee membership is required by the best
interests of Peoples and its shareholders. The Board of Directors made this
determination with regard to Mr. Dimit due to his experience as Chairman of the
Audit Committee from April 1997 to 2005 and a member of the Audit Committee
since January 1993 during which time he had been instrumental to the conduct of
the business of the Audit Committee. A member of the Audit Committee appointed
under this exception may not serve longer than two years. Consequently, Mr.
Dimit's Committee seat will remain vacant until 2009, at which time Mr. Dimit
will no longer be disqualified as an independent director under the applicable
NASDAQ Rules due to the transactions described in "Independence of Directors,"
and it is expected that Mr. Dimit will be re-appointed to the Audit Committee.
As of April 13, 2006, Frank L. Christy no longer serves as a member of the Audit
Committee in order that he may focus his efforts on his role as Chairman of the
Compensation Committee.
The Board of Directors has concluded that each member of the Audit
Committee is capable of (i) understanding accounting principles generally
accepted in the United States ("US GAAP") and financial statements, (ii)
assessing the general application of US GAAP in connection with the accounting
for estimates, accruals and reserves, (iii) analyzing and evaluating Peoples'
consolidated financial statements, (iv) understanding internal control over
financial reporting, and (v) understanding audit committee functions, all of
which are attributes of an "audit committee financial expert" under the SEC's
rules. Based upon his background, knowledge, qualifications, experience and
profession, the Board of Directors has determined that Richard Ferguson
qualifies as an "audit committee financial expert" under the SEC's rules, and as
"financially sophisticated" for purposes of the applicable NASDAQ Rules.
COMPENSATION COMMITTEE
The Compensation Committee is comprised of six directors who qualify as
"independent directors" under the applicable NASDAQ Rules; "outside directors"
under Section 162(m) of the Internal Revenue Code; and "non-employee directors"
under Rule 16b-3 under the Exchange Act. The members of the Compensation
Committee are: Frank L. Christy (Chairman of the Compensation Committee); Carl
L. Baker, Jr.; George W. Broughton; David L. Mead (appointed to the Compensation
Committee on October 12, 2006); Robert W. Price; and Paul T. Theisen.
The Compensation Committee is organized and conducts its business
pursuant to a written charter adopted by the Board of Directors. A current copy
of the charter of the Compensation Committee is posted on the "Corporate
Governance and Code of Ethics" page of Peoples' website at
www.peoplesbancorp.com. The Compensation Committee periodically reviews and
reassesses the adequacy of its charter and recommends any proposed changes to
the full Board of Directors for approval.
The Compensation Committee held 10 meetings during 2006. The agenda for
the meetings of the Compensation Committee is determined by its Chairperson with
the assistance of Peoples' Executive Vice President, Operations who also serves
as the Secretary of the Compensation Committee. During the 2006 year, the
Compensation Committee reviewed and approved on behalf of the Board of
Directors, management recommendations regarding all forms of compensation
provided to the executive officers and directors of Peoples and its
subsidiaries. Additionally, the Compensation Committee reviewed and approved all
equity-based compensation, cash incentives, perquisites, employee benefits,
salary programs, and human resources policies and procedures for employees of
Peoples and its subsidiaries. The Compensation Committee also reviewed and
approved the 2006 goals and objectives relevant to the compensation of Peoples'
named executive officers. The Compensation Committee evaluated the named
executive officers' (as found in the Summary Compensation Table on page 26)
performance in light of those goals and objectives and determined the
compensation earned by each executive officer based on that evaluation.
Leadership and management succession plans were also reviewed and discussed
during 2006.
The purpose of the Compensation Committee is to review and approve, on
behalf of the Board of Directors, management recommendations regarding all forms
of compensation, including equity-based compensation, to be provided to the
executive officers and directors of Peoples and subsidiaries and all bonus and
equity-based compensation, incentives, perquisites, employee benefits, salary
programs and human resources policies and procedures for employees of Peoples
and our subsidiaries. The Compensation Committee is responsible for reviewing
and approving goals and objectives relevant to the compensation of Peoples'
executive officers and other officers designated by the Board of Directors,
evaluating such officers' performance in light of those goals and objectives and
determining compensation based on that evaluation. The Compensation Committee
administers Peoples' Amended and Restated 1993 Stock Option Plan (the "1993
Plan"), 1995 Stock Option Plan (the "1995 Plan"), 1998 Stock Option Plan (the
"1998 Plan"), 2002 Stock Option Plan (the "2002 Plan") and 2006 Equity Plan (the
"2006 Plan"); and any other plans requiring Compensation Committee
administration and approves awards as required to comply with applicable
securities and tax laws. The Compensation Committee will undertake such other
responsibilities as the full Board of Directors may prescribe.
The Compensation Discussion and Analysis regarding executive
compensation appears beginning on page 18, and the Compensation Committee's
report appears beginning on page 25.
EXECUTIVE COMMITTEE
The Executive Committee is comprised of five directors: Mark F. Bradley
(Chairman); Wilford D. Dimit; Robert W. Price; Paul T. Theisen; and Joseph H.
Wesel. The Executive Committee is authorized to act in the intervals between
meetings of the directors on matters delegated to the Executive Committee by the
full Board of Directors. There were two meetings of the Executive Committee
during the 2006 fiscal year.
GOVERNANCE AND NOMINATING COMMITTEE
The members of the Governance and Nominating Committee are: Paul T.
Theisen (Chairman); George W. Broughton; and Robert W. Price. Wilford D. Dimit
was also a member of the Governance and Nominating Committee until his
resignation from that Committee effective January 25, 2007. Messrs. Broughton,
Dimit, Price and Theisen served on the Governance and Nominating Committee
throughout the entire 2006 fiscal year. The Board of Directors has determined
that each of the members of the Governance and Nominating Committee qualifies as
an independent director under applicable NASDAQ Rules. Mr. Dimit had served on
the Governance and Nominating Committee pursuant to a provision in the
applicable NASDAQ Rules which permit, under exceptional and limited
circumstances, one member of the Governance and Nominating Committee to be a
director who does not meet the independence requirements of the applicable
NASDAQ Rules if (i) that director is not a current officer or employee of
Peoples or any of our subsidiaries (or a family member of such an officer or
employee) and (ii) the Board of Directors has determined that such director's
committee membership is required by the best interests of Peoples and its
shareholders. The Board of Directors made such a determination with regard to
Mr. Dimit due to his experience as a member of the Executive Committee since
2004 and a member of the Governance and Nominating Committee since its inception
in 2003. A member of the Governance and Nominating Committee appointed under
this exception may not serve longer than two years. Consequently, Mr. Dimit's
committee seat will remain vacant until 2009, at which time Mr. Dimit will no
longer be disqualified as an independent director under the applicable NASDAQ
Rules due to the transactions described in "Independence of Directors" and it is
expected that Mr. Dimit will be re-appointed to the Governance and Nominating
Committee.
The Governance and Nominating Committee is organized and conducts its
business pursuant to a written charter adopted by the Board of Directors. The
purposes of the Governance and Nominating Committee are:
o to identify qualified candidates for election, nomination or
appointment to the Board of Directors and recommend to the full Board
a slate of director nominees for each annual meeting of the
shareholders of Peoples or as vacancies occur;
o to make recommendations to the full Board of Directors and the
Chairman of the Board regarding assignment and rotation of members and
chairs of committees of the Board;
o to oversee matters of corporate governance, including an evaluation of
Board performance and processes;
o to review with the Chairman of the Board, or another director
designated by the full Board, issues involving potential conflicts of
interest and/or any change of status of directors pursuant to
applicable law and the applicable provisions of Peoples' Code of
Ethics for Directors, Officers and Employees or Peoples' Code of
Regulations;
o to recommend the number of individuals to serve on the Board of
Directors;
o to periodically review Peoples' Code of Ethics for Directors, Officers
and Employees and recommend to the full Board changes thereto, as
necessary; and
o to undertake such other responsibilities as may be referred to the
Governance and Nominating Committee by the full Board of Directors or
the Chairman of the Board.
The charter of the Governance and Nominating Committee is posted on the
"Corporate Governance & Ethics" page of Peoples' website at
www.peoplesbancorp.com. The Governance and Nominating Committee periodically
reviews and reassesses the adequacy of its charter and recommends any proposed
changes to the full Board of Directors for approval. The Governance and
Nominating Committee held three meetings during the 2006 fiscal year.
NOMINATING PROCEDURES
As described above, Peoples has a standing Governance and Nominating
Committee that has the responsibility to identify and recommend to the full
Board individuals qualified to become directors. Each candidate must satisfy the
eligibility requirements set forth in Peoples' Code of Regulations. To be
eligible for election as a director, an individual must be a shareholder of
Peoples. In addition, the individual must either (i) serve as chief executive
officer or in another position of active leadership with a business or
professional interest located within the geographic area served by Peoples and
our subsidiaries or (ii) serve as an executive officer of Peoples or one of
Peoples' subsidiaries. However, the qualification in the preceding sentence does
not apply to individuals elected as initial directors of Peoples in 1980. An
individual will not be eligible for nomination and re-election as a director
after five years has passed since the individual ceased to hold the executive or
leadership position satisfying the eligibility requirement. This five-year
limitation does not apply, however, to an individual who retires from service as
the Chairman of the Board or the Chief Executive Officer of Peoples.
When considering potential candidates for the Board of Directors, the
Governance and Nominating Committee strives to assure that the composition of
the Board, as well as its practices and operation, contribute to value creation
and to the effective representation of Peoples' shareholders. The Governance and
Nominating Committee may consider those factors it deems appropriate in
evaluating director candidates, including judgment, skill, diversity, strength
of character, experience with businesses and organizations comparable in size or
scope to Peoples, experience and skill relative to other Board members and
specialized knowledge or experience. Depending upon the current needs of the
Board of Directors, certain factors may be weighed more or less heavily by the
Governance and Nominating Committee.
In considering candidates for the Board of Directors, the Governance
and Nominating Committee evaluates the entirety of each candidate's credentials
and, other than the eligibility requirements set forth in Peoples' Code of
Regulations, does not have any specific minimum qualifications that must be met
by a Governance and Nominating Committee-recommended nominee. However, the
Governance and Nominating Committee does believe that all members of the Board
should have the highest character and integrity, a reputation for working
constructively with others, sufficient time to devote to Board matters, and no
conflict of interest that would interfere with performance as a director.
The Governance and Nominating Committee considers candidates for the
Board of Directors from any reasonable source, including shareholder
recommendations. The Governance and Nominating Committee does not evaluate
candidates differently based on who has made the recommendation. The Governance
and Nominating Committee has the authority under its charter to hire and pay a
fee to consultants or search firms to assist in the process of identifying and
evaluating director candidates. No such consultants or search firms have been
used to date and, accordingly, no fees have been paid to consultants or search
firms.
Shareholders may recommend director candidates for consideration by the
Governance and Nominating Committee by writing to the Corporate Secretary of
Peoples at Peoples' executive offices in Marietta, Ohio, giving the candidate's
name, age, business address, residence address, principal occupation or
employment and number of common shares beneficially owned. The recommendation
should also describe the qualifications, attributes, skills or other qualities
of the recommended director candidate. A written statement from the candidate
consenting to be named as a director candidate and, if nominated and elected, to
serve as a director should accompany any such recommendation.
Shareholders who wish to nominate an individual for election as a
director at an annual meeting of the shareholders of Peoples must comply with
Peoples' Code of Regulations regarding shareholder nominations. Shareholder
nominations must be made in writing and delivered or mailed to the Corporate
Secretary of Peoples not less than 14 days nor more than 50 days prior to any
meeting of shareholders called for the election of directors. However, if less
than 21 days' notice of the meeting is given to the shareholders, the nomination
must be mailed or delivered to the Corporate Secretary not later than the close
of business on the seventh day following the day on which the notice of the
meeting was mailed to the shareholders. Nominations for the Annual Meeting must
be received by March 28, 2007. Each nomination must contain the following
information to the extent known by the nominating shareholder:
o the name, age, business address and residence address of each proposed
nominee;
o the principal occupation or employment of each proposed nominee;
o the number of common shares beneficially owned by each proposed
nominee and by the nominating shareholder; and
o any other information required to be disclosed with respect to a
nominee for election as a director under the SEC's proxy rules.
Each nomination must be accompanied by the written consent of the
proposed nominee to serve as a director of Peoples if elected. Nominations not
made in accordance with the above requirements and Peoples' Code of Regulations
will not be considered.
SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Although Peoples has not to date developed formal processes by which
shareholders may communicate directly with directors, it believes that the
informal process, in which any communication sent to the Board of Directors
either generally or in care of the Chief Executive Officer, the Corporate
Secretary or another corporate officer is forwarded to all members of the Board
or specified individual directors, if applicable, has served the needs of the
Board and Peoples' shareholders. There is no screening process, and all
shareholder communications that are received by officers for the attention of
the Board of Directors are forwarded to the members of the Board.
Having found no problems with shareholder communications to directors
under the existing process, the Governance and Nominating Committee has not
found it necessary to develop more specific procedures. Until other procedures
are developed and posted on the "Corporate Governance & Ethics" page of Peoples'
website at www.peoplesbancorp.com, any communication to the Board of Directors
or to individual directors may be mailed to the Board or one or more individual
directors, in care of Peoples' Corporate Secretary, at Peoples' headquarters in
Marietta, Ohio. The mailing envelope must contain a clear notation indicating
that the enclosed letter is a "Shareholder-Board Communication" or
"Shareholder-Director Communication," as appropriate. In addition, shareholders
may utilize Peoples' website to communicate with the Board or individual
directors. Correspondence through the "Investor Relations - Shareholder
Contacts" page of the website is also directed to the Corporate Secretary. All
such communications, whether via mail or the website, must identify the author
as a shareholder of Peoples and clearly state whether the intended recipients
are all members of the Board of Directors or just certain specified individual
directors. The Corporate Secretary will make copies of all such communications
and circulate them to the appropriate director or directors without any
screening.
EXECUTIVE COMPENSATION:
COMPENSATION DISCUSSION AND ANALYSIS
Overview of Compensation Program
--------------------------------
The Compensation Committee (for the purpose of this discussion and
analysis, the "Committee") of the Board of Directors has responsibility for
establishing, implementing, and continually monitoring adherence with Peoples'
compensation philosophy. The Committee ensures that the total compensation paid
during 2006 to the President and Chief Executive Officer, and Chief Financial
Officer and Treasurer, and the other individuals included in the Summary
Compensation Table on page 26 (referred to as the "named executive officers"),
is reasonable, competitive and aligned with the best interests of the
shareholders.
Compensation Philosophy and Objectives
--------------------------------------
The compensation philosophy of the Committee is to allow for the proper
management and oversight of compensation for Peoples' officers and employees,
especially for the purposes of retaining, recruiting, and developing talented
financial services personnel and management. The intent is to award increases in
base salary and grant incentive awards based on the individual's contribution to
the overall improved performance of Peoples.
While the Committee oversees the compensation of all officers and
employees, a primary focus of the Committee is the compensation for Peoples'
executive and senior officers. The intent is to reward all employees for
continuous improvement and industry leading best practices, but specifically, to
set up compensation plans for executives and senior officers to reward those
employees for enhancing shareholder value. The compensation philosophy covers
the direct forms of compensation including base salary, annual cash incentives
and any form of equity-based compensation. The compensation philosophy statement
is a tool that the Board of Directors and management use to ensure that
compensation programs are developed that are both competitive with respect to
officer compensation and reasonable within the marketplace.
o Base Salary: Base salaries are to be competitive to the market median.
Based upon individual circumstances, actual base salary levels may be
higher or lower than the market median.
o Total Cash Compensation: Total cash compensation is base salary plus
an annual cash incentive. The objective is that total cash
compensation will be consistent with the market median for results
that are in line with the general market for financial services
providers, and targeted at the 75th percentile or higher for superior
performance by Peoples.
o Total Direct Compensation: Peoples utilizes long-term equity-based
incentives for compensation purposes, typically in the form of
equity-based awards for executives and senior officers in leadership
capacities or other key positions. The objective is to grant
equity-based awards only after performance goals have been achieved,
and then, there is additional time-based vesting of the awards to
enhance employee retention. Total direct compensation is total cash
compensation plus equity-based awards. The goal for total direct
compensation is that the annualized total direct compensation will be
at the market median for performance consistent with the financial
services market, and targeted at the 75th percentile or higher for
superior performance by Peoples.
Role of Executive Officers in Compensation Decisions
----------------------------------------------------
The Committee makes all compensation decisions related to the named
executive officers of Peoples and approves equity-based award grants for the
non-employee directors. Annually, the President and Chief Executive Officer
reviews with the Committee the performance of the executive officers (which
includes all actively-employed named executive officers), excluding himself. The
conclusions reached and the recommendations based on these performance reviews,
including salary adjustments, annual cash incentive payments, and equity-based
awards are presented to the Committee. The Committee can exercise its discretion
in modifying any recommended adjustments or awards to the named executive
officers. Additionally, the Committee seeks input from the Board of Directors
regarding the performance of the President and Chief Executive Officer and
determines the base salary adjustment, annual cash incentive payment and
equity-based awards for the President and Chief Executive Officer.
Setting Executive Compensation
------------------------------
In order to ensure that Peoples provides total compensation that is
competitive with its geographic peers and the financial services industry in
general, from time to time, the Committee has used the services of Clark
Consulting, Inc. ("Clark Consulting"), a compensation and benefits consultant
serving the banking industry. The Committee has the sole authority to engage the
services of any consultant or advisor and to approve the payment of their fees.
The Committee has identified a group of 14 peer financial institution
holding companies based on market capitalization, geographic location,
performance, and similarity in lines of business for the purpose of comparing
Peoples' compensation programs. With the assistance of Clark Consulting, the
Committee chose a peer group which is comprised of publicly-traded financial
institution holding companies with total asset sizes ranging from $1.1 billion
to $5.4 billion and located in similar markets and/or geographic areas to
Peoples in the states of Ohio, West Virginia, Pennsylvania, Kentucky, and New
York. The peer group, with each corporation's trading symbol, consisted of Camco
Financial Corp. (CAFI); Oak Hill Financial Inc. (OAKF); S.Y. Bancorp, Inc.
(SYBT); First Defiance Financial Corp. (FDEF); Farmers Capital Bank Corp.
(FFKT); Tompkins Trustco, Inc. (TMP); City Holding Company (CHCO); United
Community Financial Corp. (UCFC); First Place Financial Corp. (FPFC); Republic
Bancorp, Inc. (RBCAA); Community Trust Bancorp, Inc. (CTBI); Park National
Corporation (PRK); S&T Bancorp, Inc. (STBA); and WesBanco Inc. (WSBC). This 14
member group will be referred to in this discussion and analysis as the "Peer
Group".
The Committee has determined that base salaries for the executive
officers should be competitive with the market median of the Peer Group.
Depending on individual performance and overall contribution to Peoples'
performance, the actual base salary for a particular executive officer may be
higher or lower than the market median. Individual executive officer salary
increases are reviewed annually by the Committee and are based on Peoples'
overall performance and the executive officer's attainment of specific
individual business objectives during the preceding year.
2006 Executive Compensation Components
--------------------------------------
For 2006, the principal components of compensation for the named
executive officers were:
o Base salary;
o Annual cash incentive;
o Long-term equity-based incentive compensation; |X| Retirement and
other benefits; and
o Perquisites and other personal benefits.
BASE SALARY
The Committee has determined that base salaries for the executive
officers should be competitive with the market median. Depending on individual
job performance, the actual base salary for a particular named executive officer
may be higher or lower than the market median (typically in the range of the
40th to 60th percentile). Individual executive officer salary increases are
reviewed annually by the Committee and are based on the individual's overall
contribution to Peoples' performance. Likewise, the executive officer's
attainment of specific individual business objectives during the preceding year
is also a factor in any salary adjustment. Executive officers' base salaries are
determined by the Committee after evaluating the most recent comparative Peer
Group data supplied by Clark Consulting, with adjustments for individual
performance.
Individual executive officer salary adjustments are reviewed annually
by the Committee and are based on Peoples' overall corporate performance in
addition to each executive officer's attainment of specific individual business
objectives during the preceding year. Specific individual business objectives
for 2006 were established for each executive officer and were reviewed and
approved by the Committee on May 11, 2006 consistent with the overall corporate
goals approved by the Board of Directors on March 9, 2006. These objectives are
quantitative in nature, such as sales and revenue goals and cost containment;
and also qualitative in nature, such as the development and retention of key
staff, assessment and development of quality products and services, and
management effectiveness. These objectives are designed to promote the long-term
interests of Peoples' shareholders.
In the opinion of the Committee, all of the aforementioned 2006 goals
established for the executive officers promote long-term shareholder value.
In January 2007, the Committee reviewed the overall job performance of
each executive officer relative to the accomplishment of the aforementioned
goals and determined whether an adjustment in base salary was appropriate as
well as the amount of any such adjustment. The Committee believes the changes
were not material, with adjustments to each individual's previous base salary
ranging from no increase to a 5% increase. The annual base salaries for 2007
approved by the Committee are as follows: Mr. Bradley - $255,000; Mr. Landers -
$177,503; Mr. Yazombek - $206,012; Ms. Schneeberger - $169,002; and Mr. Holdren
- $162,080. Mr. Landers previously received an annual base salary adjustment to
$172,500 on August 1, 2006, when he was named Chief Financial Officer and
Treasurer of Peoples.
ANNUAL CASH INCENTIVES
Executive officers are eligible to earn an annual cash incentive under
the Incentive Award Plan. The Incentive Award Plan was developed to recognize
performance by providing increasing percentages of cash awards for increasing
levels of performance and, conversely, to not pay if performance goals are not
met. There are three possible levels of incentive awards: threshold, target and
maximum (or exceeds). The target incentive award reflects the expected results
for the year and should result in total cash compensation (base salary and annul
cash incentive) at the market median for performance consistent with the Peer
Group. If exceptional performance is achieved, the maximum level is paid and
should result in total cash compensation at the 75th percentile or higher
relative to the Peer Group.
On March 9, 2006, the Committee established the corporate cash
incentive matrix, for 2006, comprised of three financial components: (i)
Earnings Per Share; (ii) Return On Average Equity; and (iii) Efficiency Ratio.
These financial measurements were selected because the Committee believes the
measurements demonstrate the overall operating performance of Peoples and are
widely recognized as industry benchmarks for operating performance. The
weightings applied to the Earnings Per Share and Return On Average Equity
components were 45% each and the Efficiency Ratio was weighted at 10%. The
weightings were determined based on their respective impact on long-term
shareholder value.
The Board of Directors set the financial goals for 2006 as shown in the
table below.
Weighting Threshold Target Maximum
--------- --------- ------- -------
Earnings Per Share 45% $1.95 $2.10 $2.25
--------- --------- ------- -------
Return on Equity 45% 11.10% 11.90% 12.75%
--------- --------- ------- -------
Efficiency Ratio 10% 59.00% 56.61% 55.63%
--------- --------- ------- -------
If the target performance goals were achieved, Mr. Bradley had the
potential to earn a payout of up to 50% of his annual base salary; whereas, the
other executive officers had the potential to earn a payout up to 35% of his or
her annual base salary. However, if the financial performance was at threshold
or lower, there would have been no payout from corporate results, although each
executive officer might still be eligible for an incentive payout based on his
or her individual performance at the discretion of the Committee. Payout to the
named executive officers for achieving threshold performance or below in any
given corporate or individual performance measure is 0% for the given
performance measure.
Annual performance goals for Mr. Bradley, in his capacity as President
and Chief Executive Officer, were directly related to the above-mentioned
financial performance measurements, all of which are quantitative in nature. Mr.
Bradley's measurements included the evaluation of his effectiveness in strategic
thinking and implementation of long-range plans, identification of key
management personnel, and other leadership-based factors designed to promote
shareholder value. The annual cash incentive was weighted 90% for attainment of
these financial components and 10% for individual performance, as determined by
the Committee with input from the entire Board of Directors. The maximum cash
payout Mr. Bradley could receive is 100% of his annual base salary, based on
maximum corporate performance goals established by the Committee for 2006.
In addition to corporate performance goals, which were the same as Mr.
Bradley's, annual individual performance goals were also established for each
other executive officer, the nature of which differed depending upon the
officer's job responsibilities. Goals were both quantitative in nature, such as
sales and revenue goals and cost containment; and also qualitative in nature,
such as the development and retention of key staff, assessment and development
of quality products and services, and management effectiveness. Annual cash
incentives for these other executive officers were weighted 75% to 90% for the
attainment of the previously-mentioned corporate financial components and the
remaining 10% to 25% based on the attainment of specific individual goals. The
maximum cash payout, which these individuals could have received, was 70% of
their respective annual base salaries, based on the maximum corporate
performance goals established by the Committee for 2006.
The Committee also has in place absolute minimum, which was defined in
2006 as 85% of Peoples' threshold earnings per share goal of $1.95. If Peoples
did not achieve absolute minimum earnings per share, each executive officer
would not have been eligible for a year-end cash incentive payout, based on the
financial components although the Committee could have considered granting
individual cash incentives and long-term equity-based incentive awards if the
executive officer's individual contribution warranted such payment. If Peoples'
financial results were between absolute minimum and threshold, then no
incentives would have been earned from corporate results but each executive
officer would have been eligible to earn cash incentives and long-term equity
incentives based on individual contribution to enhanced shareholder value.
The Committee retains the right to exercise discretion in the awarding
of cash incentives absent the attainment of performance goals, or to increase or
reduce the size of the payout of cash incentives under the Incentive Plan Award.
The Committee did not exercise this right for cash incentives earned by the
named executive officers for 2006 performance.
Payout percentages for the various levels of performance are reviewed
by the Committee on an annual basis and generally do not change from year to
year. Corporate performance goals are approved on an annual basis by the Board
of Directors.
At the end of each year, the extent to which the financial components
of Peoples' financial performance goals and the individual performance goals are
actually achieved is measured. If all target goals are satisfied, the executive
officer receives a target cash incentive amount. To the extent goals are
partially met, then only that portion as expressed in the cash incentive matrix
is paid. If the target goals are exceeded, a higher portion of the cash
incentive matrix is paid up to the maximum established amount. Annual cash
incentive payments were made to the executive officers in accordance with the
pre-established cash incentive matrix.
Executive officers are required to defer 25% of any annual cash
incentives earned into a non-qualified deferred compensation plan. The deferral
period is three years. They also have the option to defer any remaining
incentive compensation to be paid to them as well as further defer the mandatory
amount after the original three-year period has lapsed until they reach
retirement age or until their employment with Peoples is terminated. The amount
an executive officer elects to be voluntarily deferred is chosen by the
executive officer prior to the beginning of the calendar year in which the cash
incentive compensation is earned. Interest on the deferred compensation is
accrued at a rate equal to 50% of Peoples' Return on Average Equity achieved
during each calendar year throughout the deferral period. This is another way in
which Peoples links the long-term economic interests of the named executive
officers with those of the shareholders. Once the mandatory deferral period has
lapsed, executive officers may either take a cash distribution or roll it into a
voluntary non-qualified deferred compensation plan, based on an election made
prior to the year the incentive was earned, until they reach retirement or their
employment is terminated.
LONG-TERM EQUITY-BASED INCENTIVE COMPENSATION
Executive officers are also eligible to earn long-term equity-based
incentives under Peoples' equity-based compensation plans. Like the Incentive
Award Plan (annual cash incentive plan), Peoples' equity-based plans were
designed to provide increasing award values for increasing levels of
performance, and conversely, to not pay if performance goals are not met. There
are three possible levels of incentive awards: threshold, target and maximum (or
exceeds). The target incentive award reflects the expected results for the year
and should result in total direct compensation (total cash compensation and
equity-based awards) at the market median for performance consistent with the
Peer Group. If exceptional performance is achieved, the maximum level is paid
and should result in total cash compensation at the 75th percentile or higher
relative to the Peer Group. Awards are granted on an annual basis, if earned,
and require a time-based vesting period, which serves to focus the executives on
Peoples' long-term performance improvement and increased shareholder value.
The Committee used Clark Consulting to review the competitiveness of
Peoples' equity-based compensation plans. As a result of that review, the
Committee designed the 2006 Equity Plan in order to provide new, competitive
incentive compensation opportunities compared to the Peer Group. The 2006 Equity
Plan allows different forms of long-term equity-based awards to be granted for
compensation purposes, including restricted stock and stock appreciation rights
to be settled in common shares. The objective is to grant equity-based awards
only after pre-established performance goals are achieved. To enhance retention
of the named executive officers and to ensure current and subsequent business
decisions are aligned with the long-term interests of the shareholders, a
three-year vesting requirement must be met.
Previous equity plans provided for stock options as the single form of
equity-based award available for grant. The 2006 Equity Plan prohibited the
grant of any awards from predecessor plans on or after the date the 2006 Equity
Plan was approved. The new equity design should strengthen Peoples' ability to
attract, develop, and retain talent. Likewise, it should also promote closer
alignment with the long-term performance goals of Peoples and the long-term
interests of the shareholders.
On February 9, 2006, the Committee approved the grant of stock option
awards to the named executive officers under the 2002 Stock Option Plan. Award
values were calculated as a percentage of salary earned based on 2005 corporate
and individual results using the closing price of Peoples' common shares on the
date of grant, which was also the approval date. Results were measured against
corporate and individual performance goals approved by the Committee for 2005 to
determine the payout percentages. 100% of each named executive officer's award
is exercisable upon the third anniversary of the date of grant. The option date
terminates 10 years from the date of grant. The Committee has the authority to
accelerate the vesting of the stock option grants when such action would be in
the best interest of Peoples.
At the April 13, 2006 Annual Meeting of Shareholders, the 2006 Equity
Plan was approved by the shareholders of Peoples.
To determine the competitiveness of equity-based award grants, the
Committee has established a goal for total direct compensation, which is the
total cash compensation and equity-based awards, to be at the market median for
performance consistent with the Peer Group and targeted at the 75th percentile
or higher for superior performance by Peoples.
Equity-based awards reflecting the level of achievement of 2006
performance goals were granted on February 13, 2007, in an equal value
combination of restricted stock and stock appreciation rights to be settled in
common shares. These types of equity-based awards were not available under
Peoples' previous long-term equity-based incentive plans. Such equity grants
reduce the amount of dilution to existing Peoples' shareholders as compared to
the dilution created by stock options previously granted for long-term
equity-based incentive purposes. Restricted stock and stock appreciation rights
to be settled in common shares also enable the executive officer to retain the
equity earned without requiring an outlay of cash by the executive officer. In
determining the total number of equity-based awards to be granted annually to
each recipient, including each executive officer, the Committee considers the
employee's individual performance as well as the performance of Peoples during
the immediately preceding year, using the same corporate and individual
performance measures as used for the annual cash incentives under the Incentive
Award Plan.
The Board of Directors set the financial performance goals for
equity-based awards for 2006. These goals are the same as the goals set for the
Incentive Award Plan, thereby maximizing attention on the same set of specific
goals, and are shown in the table below.
Weighting Threshold Target Maximum
--------- --------- ------ -------
Earnings Per Share 45% $1.95 $2.10 $2.25
--------- --------- ------ -------
Return on Equity 45% 11.10% 11.90% 12.75%
--------- --------- ------ -------
Efficiency Ratio 10% 59.00% 56.61% 55.63%
--------- --------- ------ -------
If the target corporate performance goals are achieved, Mr. Bradley has
the potential to earn an equity-based award up to 25% of his annual base salary;
whereas, the other executive officers have the potential to earn equity-based
awards up to 20% of his or her annual base salary. The maximum equity-based
award Mr. Bradley could earn is up to 50% of his annual base salary. Likewise,
the maximum equity-based award available to the other executive officers is up
to 40% of his or her annual base salary, based on maximum corporate performance
goals established by the Board of Directors and payout percentages established
by the Committee for 2006. Payout to the named executive officers for achieving
threshold performance or below in any given corporate or individual performance
measure is 0% for the given performance measure.
The Committee also has in place absolute minimum, which was defined in
2006 as 85% of Peoples' threshold earnings per share goal of $1.95. If Peoples
did not achieve absolute minimum earnings per share, each executive officer
would not have been eligible for a year-end incentive payout in the form of an
equity-based award, although the Committee could have considered granting
individual cash incentives and long-term equity-based incentives if the
executive's individual contribution warranted such payment. If Peoples'
financial results were between absolute minimum and threshold, then no
incentives would have been earned from corporate results but each executive
officer would have been eligible to earn cash incentives and long-term
equity-based incentives based on individual contribution to enhanced shareholder
value.
The Committee retains the right to exercise discretion in the awarding
of equity-based compensation absent the attainment of performance goals, or to
increase or reduce the size of the award. The Committee did not exercise this
right for equity-based awards granted to the named executive officers in 2006
(for 2005 performance) or 2007 (for 2006 performance).
Equity-based award percentages for the various levels of performance
are reviewed by the Committee on an annual basis and generally do not change
from year to year. Corporate performance goals are approved on an annual basis
by the Board of Directors. Equity-based awards are granted after results for the
performance goals are determined.
Equity-based awards in the form of stock appreciation rights settled in
Peoples' common shares have an exercise price of 100% of the fair market value
of the underlying common shares on the date of grant. The Committee's philosophy
in granting equity-based awards is to promote retention through a three-year
vesting period and to provide an opportunity for executive ownership of Peoples'
common shares. This in turn aligns the long-term interests of the executive
officers with those of Peoples' shareholders. The Committee believes the
executive officers will have an added incentive to manage with a view toward
maximizing long-term shareholder value.
The Committee has established guidelines for the number of common
shares available for the granting of equity-based awards to each named executive
officer based on individual job performance and Peoples' financial performance.
In the case of stock appreciation rights to be settled in Peoples' shares, these
equity grants provide incentive for the creation of shareholder value since the
full benefit of the grant to each executive officer can only be realized with an
appreciation in the price of Peoples common shares. Both stock appreciation
rights to be settled in common shares and restricted stock enable the executive
to increase their ownership of Peoples' stock. These same forms of equity, while
granted in value similar to former stock option grants, result in less dilution
to Peoples' shareholders. The Committee believes the equity-based awards granted
to the named executive officers mutually align the interests of the executive
officers with those of the shareholders.
Equity-based awards are granted at the The NASDAQ Stock Market, Inc.'s
closing price of Peoples' common shares on the date of the grant. The Committee
does not grant equity-based awards with an exercise price that is less than the
closing price of Peoples' common shares on the grant date. Additionally, the
Committee approves all grants prior to the grant price being established by the
market.
The Committee or the Board of Directors approves all equity-based
grants to the executive officers and other officers. The grant date is the date
of the approval by the Committee or the Board of Directors or the first future
date after which all material information has been publicly disclosed, whichever
is later. In the event of equity-based grants for new hires, the date of grant
is the first business date of the month following the new employee's date of
hire.
Equity-based grants earned for corporate and individual performance in
2006 were approved in accordance with the pre-established grant matrix by the
Committee on February 8, 2007, with a grant date of February 13, 2007. Award
values were calculated as a percentage of salary. Fifty percent of the value was
awarded in restricted stock, using the closing price of Peoples' common shares
on February 13, 2007. The remaining 50% of the value was awarded in stock
appreciation rights to be settled in common shares, using the Black-Scholes
value of the instrument as of the award date. The restriction period for the
restricted stock awards is three years from the grant date. The stock
appreciation rights have a term of 10 years and are exercisable at the end of
the vesting period, which is three years from the grant date. The Committee or
the Board of Directors has the authority to accelerate the date on which the
stock appreciation rights may be exercised, or the date of the termination of
the restrictions applicable to a restricted stock award, if the Committee or the
Board of Directors determines that to do so would be in the best interests of
Peoples and those who have been granted equity-based awards. The Committee
believes the program will operate in the same manner for 2007.
RETIREMENT AND OTHER BENEFITS
The executive officers are employees of Peoples and as such participate
in benefit programs available to other employees of Peoples, subject to the same
eligibility requirements as all employees. The Peoples Bancorp Inc. Retirement
Plan and Trust (the "Plan") has a different benefit calculation for those
individuals employed by Peoples before January 1, 2003 and those employed by
Peoples on January 1, 2003 and thereafter. The eligibility requirements to
participate in the Plan are the same for both groups. Individuals must be
employed by Peoples for six months and be at least age 20 1/2.
Compensation used to calculate the amount of pension payable includes
base salary, incentive pay, overtime pay, bonuses, and any pre-tax savings under
the 401(k) retirement savings plan maintained by Peoples as well as Peoples'
Internal Revenue Code Section 125 plan. Benefit distribution options are
identical for both groups as well as the five-year vesting requirement in order
to be eligible for a pension benefit under the Plan.
For those executive officers employed by Peoples before January 1,
2003, normal retirement occurs at age 65. The pension benefit is calculated as
follows:
(a) Forty percent (40%) of the executive officer's average
compensation (annual compensation during the highest five
consecutive years out of the last ten years of service), plus
(b) Seventeen percent (17%) of the excess of the executive
officer's average compensation in excess of his/her Social
Security covered compensation;
(c) Such sum of (a) and (b) is multiplied by the total years of
service with Peoples up to a maximum of 30.
For those executive officers employed by Peoples before January 1,
2003, early retirement can occur at age 50 if the executive officer has at least
10 years of service with Peoples. The pension benefit is calculated as follows:
(a) Forty percent (40%) of the executive officer's average
compensation (annual compensation during the highest five
consecutive years out of the last ten years of service), plus
(b) Seventeen percent (17%) of the excess of the executive
officer's average compensation in excess of his/her Social
Security covered compensation;
(c) Such sum of (a) and (b) is multiplied by the total years of
service with Peoples up to a maximum of 30 and reduced by
one-fifteenth for each of the first five years and
one-thirtieth for each of the next ten years by which the
executive's early retirement date precedes the normal
retirement date.
For those executive officers employed by Peoples on or after January 1,
2003, normal retirement occurs at age 65. The pension benefit is calculated as
follows:
(a) The Cash Balance Account at the end of the prior plan year,
plus
(b) Interest to the earlier of the end of the prior plan year or
the end of the month containing the executive officer's
termination of employment on the Cash Balance Account as of
the end of the prior plan year based on the one-year constant
maturity rate for the December preceding the determination
year plus 50 basis points, plus
(c) An annual accrual equal to 2% of compensation for the plan
year provided the executive officer earned a year of service
during the plan year.
For those executive officers employed by Peoples on or after January 1,
2003, early retirement can occur at age 50 if the executive officer has at least
10 years of service with Peoples. The pension benefit is calculated as follows:
(a) The Cash Balance Account at the end of the prior plan year,
plus
(b) Interest to the earlier of the end of the prior plan year or
the end of the month containing the executive officer's
termination of employment on the Cash Balance Account as of
the end of the prior plan year based on the one-year constant
maturity rate for the December preceding the determination
year plus 50 basis points, plus
(c) An annual accrual equal to 2% of compensation for the plan
year provided the executive officer earned a year of service
during the plan year;
(d) The benefit is reduced as follows:
Ages Reduction
60 - 65 6.66% per year
50 - 60 3.33% per year
Messrs. Bradley, Holdren and Yazombek and Ms. Schneeberger were
employed by Peoples prior to January 1, 2003; whereas, Mr. Landers was employed
by Peoples after January 1, 2003. None of the executive officers participate in
multiple defined benefit retirement plans. Under the terms of the Plan, the
named executive officers are not granted extra years of credited service.
The executive officers are also eligible to participate in the Peoples
Bancorp Inc. Retirement Savings Plan (Peoples' 401(k) plan), on the same basis
as other employees. Peoples matches 100% of the first 3% of the employee's
contribution and then matches 50% of the next 2% that the employee contributes.
The maximum match is 4%.
The executive officers participate in the Peoples Bancorp Group Term
Life Insurance Plan on the same basis as other employees. Peoples pays the
premiums for all associates. In the event a named executive officer dies, his or
her beneficiary will be paid an amount equal to two times the executive
officer's base salary at the time of death, up to a limit of $600,000 per
employee.
The executive officers are eligible to participate in the medical and
dental insurance plans provided by Peoples. These individuals participate on the
same basis as other employees. The plans are contributory and both the employees
and Peoples pay for the cost of the health insurance premiums.
PERQUISITES AND OTHER PERSONAL BENEFITS
The Committee periodically reviews the level of perquisites and other
benefits provided to the executive officers. Consistent with its overall
compensation program, the Committee believes the perquisites and other benefits
provided to the executive officers are reasonable and will enable Peoples to
attract and retain superior employees for key positions that promote the
long-term interests of our shareholders.
On January 12, 2006, the Committee approved the adoption of an
Executive Health Program for the executive officers. The Executive Health
Program provides an opportunity for each named executive officer to participate
in a comprehensive medical screening annually at the expense of Peoples.
Participation is voluntary. The objective of the Executive Health Program is the
early identification of potential health problems and the prompt, expert
treatment of any medical problems detected, which could negatively impact
Peoples' financial performance or current management succession plans.
Based on business need, on a case-by-case basis, the Committee grants
the use of a company-paid automobile and country club membership to selected
executive officers to further business development on behalf of Peoples.
Expenses relating to personal use of the country club amenities are either
reimbursed to Peoples or paid by the executive officer. Expenses relating to
personal use of company automobiles are reported as income to the executive
officer.
Peoples has entered into Change in Control Agreements with some of the
named executive officers. The Change in Control Agreements are designed to
motivate executive officers to act in the best interests of shareholders and to
promote stability and continuity of the services of the executive officers
during a change in control. Information regarding the applicable payments under
such agreements for the named executive officers is provided under the heading
of "Other Potential Post Employment Payments" on page 31.
TAX AND ACCOUNTING IMPLICATIONS
-------------------------------
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986, as amended,
prohibits Peoples from claiming a deduction on its federal income tax return for
compensation in excess of $1 million paid for a given fiscal year to the chief
executive officer (or person acting in that capacity) at the close of Peoples'
fiscal year and the four most highly compensated officers of Peoples, other than
the chief executive officer, at the end of Peoples' fiscal year. The $1 million
compensation deduction limitation does not apply to "performance-based
compensation". The 2006 Equity Plan complies with Section 162(m) so that any
compensation, which may be received by executive officers of Peoples under this
plan, will qualify as "performance-based". Performance goals were included in
the 2006 Equity Plan, which was approved by Peoples' shareholders on April 13,
2006. All executive officers of Peoples receive compensation at levels
substantially below the $1 million deductibility limit.
NON-QUALIFIED DEFERRED COMPENSATION
As required by the Internal Revenue Service, all corporations need to
be in operational compliance at present and in documentary compliance by
year-end 2007 with Internal Revenue Code Section 409A. Peoples is operating
under the tenants of Section 409A presently and is scheduled to have all
documents amended to comply with this Internal Revenue Code section by the end
of 2007. At present, there is further guidance which is expected from the IRS
during the first half of 2007. Peoples is waiting to receive the additional
guidance prior to completing its Section 409A amendment process. When Peoples'
plan documents and individual agreements are modified to comply with Section
409A, such documents will be filed through our normal SEC disclosure process.
ACCOUNTING FOR EQUITY-BASED COMPENSATION
Beginning on January 1, 2006, Peoples began accounting for equity-based
grants in accordance with the requirements of Financial Accounting Standards
Board Statement of Financial Accounting Standards No. 123 (revised 2004),
"Share-Based Payment" (FAS 123(R)).
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation
Discussion and Analysis required by Item 402(b) of SEC Regulation S-K with
management and based on such review and discussion, the Compensation Committee
recommended to the Board of Directors that the Compensation Discussion and
Analysis be included in this Proxy Statement.
Submitted by the Compensation Committee of Peoples' Board of Directors:
Frank L. Christy, Chairperson; Carl L. Baker; George W. Broughton; David L.
Mead; Robert W. Price; and Paul T. Theisen
SUMMARY COMPENSATION TABLE FOR 2006
The table below summarizes the total compensation paid or earned by
each of the named executive officers for the year ended December 31, 2006.
Peoples has not entered into any employment agreements with any of the named
executive officers. When setting the total compensation for each of the
executive officers, the Compensation Committee reviews the tally sheets that
show the executive officers' current compensation, including equity and
non-equity based compensation.
----------------------------------------------------------------------------------------------------------------------------
Change in
Pension Value
and
Nonqualified
Non-Equity Deferred
Name and Principal Stock Option Incentive Plan Compensation All Other
Position Year Salary Bonus Awards Awards Compensation Earnings Compensation Total
(4) (5) (6) (8)
($) ($) ($) ($) ($) ($) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
----------------------------------------------------------------------------------------------------------------------------
Mark F. Bradley
President and Chief 2006 $250,000 - - $4,426 $56,750 $12,722 $11,793 $334,528
Executive Officer
----------------------------------------------------------------------------------------------------------------------------
John W. Conlon (1)
Chief Financial 2006 $127,455 - - $11,252 - $191,768 (7) $14,897 $345,372
Officer and Treasurer
----------------------------------------------------------------------------------------------------------------------------
Donald J. Landers (2)
$25,000 (3)
Chief Financial 2006 $143,975 - $1,380 $19,581 $3,409 - $193,345
Officer and Treasurer
----------------------------------------------------------------------------------------------------------------------------
Joseph S. Yazombek
-
Executive Vice 2006 $200,850 - $17,505 $42,114 $35,330 $13,658 $309,457
President,
Chief Lending Officer
----------------------------------------------------------------------------------------------------------------------------
Carol A. Schneeberger
-
Executive Vice 2006 $164,800 - $2,836 $27,522 $27,714 $11,262 $234,134
President, Operations
----------------------------------------------------------------------------------------------------------------------------
Larry E. Holdren
Executive Vice 2006 $162,080 - - $11,172 $22,367 $55,297 $13,036 $263,952
President
----------------------------------------------------------------------------------------------------------------------------
(1) Mr. Conlon retired as Chief Financial Officer and Treasurer on August 1,
2006.
(2) Mr. Landers was appointed Chief Financial Officer and Treasurer on
August 1, 2006 and received a base salary adjustment to $172,500 (on an
annualized basis) at the time, commensurate with his new role.
(3) Mr. Landers was paid a $25,000 deferred employment sign-on bonus on
June 30, 2006.
(4) The amounts in column (f) reflect the dollar amount recognized for
financial statement reporting purposes for 2006, in accordance with FAS
123(R) of awards pursuant to Peoples' 2002 Stock Option Plan.
Assumptions used in the calculation of these amounts are included in the
"Notes To The Consolidated Financial Statements, Note 16, Stock-Based
Compensation on pages 72 through 74 of Peoples' Annual Report on Form
10-K for the Fiscal Year Ended December 31, 2006." The entire amount of
FAS 123(R) expense was recognized in 2006 for stock option grants made
to Messrs. Conlon, Yazombek, and Holdren as they had reached retirement
eligibility (50 years of age or older and had 10 years of service with
Peoples) as of the grant date, since vesting of stock option grants
accelerates upon retirement. FAS 123(R) expense for the Messrs. Bradley
and Landers and Ms. Schneeberger is spread over the three-year vesting
period assigned to these stock option awards. Vesting for all unvested
stock option awards was accelerated on December 31, 2005; therefore, all
FAS 123(R) expense reported during 2006 is related to the stock option
award granted in 2006.
(5) The amounts in column (g) represent incentive cash incentives earned
under the Incentive Award Plan, and are reported for the year that the
cash incentives were earned. Executive officers are required to defer
25% of their cash incentive for a period of three years and have the
option to defer any of the remaining incentive compensation until they
reach retirement age or their employment is terminated. The amounts
shown include the following deferred portion of the cash incentive
earned by each named executive officer: (a) Mr. Bradley - $14,187; (b)
Mr. Landers - $4,895; (c) Mr. Yazombek - $42,114; (d) Ms. Schneeberger
- $6,880; and (e) Mr. Holdren - $11,184. The non-deferred portions of
the cash incentives were paid February 23, 2007.
(6) Amounts in column (h) represent the actuarial increase in the present
value of the named executive officer's benefits under all of Peoples'
established pension plans determined using assumptions consistent with
those used in Peoples' financial statements and includes amounts that
the named executive officer may not be entitled to receive because such
amounts are not vested, except for Mr. Bradley, which also includes
$1,163 which represents 2006 dividends credited on the cumulative amount
of director's fees deferred in prior years under the terms of the
Deferred Compensation Plan for Directors of Peoples Bancorp Inc. and
Subsidiaries. Mr. Bradley has not been paid a fee for his services as a
director of Peoples and Peoples Bank since December 31, 2004. No amount
is included in column (h) for the amount of interest accrued during 2006
on the cumulative amount of cash incentives deferred by each named
executive officer under the terms of the performance compensation
program since the rate earned was not above-market or preferential.
(7) Mr. Conlon received a lump sum pension payment of $692,855 when he
retired on August 1, 2006.
(8) All other compensation for each named executive officers includes: (a)
Mr. Bradley - 401(k) company match and country club membership; (b) Mr.
Conlon - 401(k) company match, country club membership and length of
service award; (c) Mr. Landers - $25,000 deferred employment sign-on
bonus paid on June 30, 2006; (d) Mr. Yazombek - 401(k) company match,
personal use of company provided vehicle, country club membership and
Executive Health Program; (e) Ms. Schneeberger - 401(k) company match
and Executive Health Program; and (f) Mr. Holdren - 401(k) company
match, personal use of company provided vehicle and Executive Health
Program.
GRANTS OF PLAN-BASED AWARDS FOR 2006
----------------------------------------------------------------------------------------------------------------------------------
Estimated Future Payouts Estimated Future Payouts All Other All Other
Under Non-Equity Incentive Under Equity Incentive Plan Stock Option Exercise Grant
Plan Awards Awards Awards: Awards: or Base Date Fair
(3) (4) Number of Number of Price of Value of
Shares of Securities Option Stock and
Grant Stock or Underlying Awards Option
Name Date Units (#) Options (#) ($/Share) Awards
Threshold Target Maximum Threshold Target Maximum (5)
($) ($) ($) (#) (#) (#)
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (i)
----------------------------------------------------------------------------------------------------------------------------------
Mark F. Bradley 2/9/2007 - - - -0- 5,317 10,634 - 2,970 $28.25 $21,772
N/A $0 $125,000 $250,000 - - - - - - -
----------------------------------------------------------------------------------------------------------------------------------
John W. Conlon (1) 2/9/2007 $0 - - - - - - 1,535 $28.25 $11,253
----------------------------------------------------------------------------------------------------------------------------------
Donald J. Landers (2)2/9/2007 - - - -0- 1,699 3,398 - 926 $28.25 $6,788
N/A $0 $50,391 $100,782 - - - - - - -
----------------------------------------------------------------------------------------------------------------------------------
Joseph S. Yazombek 2/9/2007 - - - -0- 3,451 6,903 - 2,388 $28.25 $17,505
N/A $0 $70,297 $140,595 - - - - - - -
----------------------------------------------------------------------------------------------------------------------------------
Carol A. Schneeberger2/9/2007 - - - -0- 2,832 5,664 - 1,903 $28.25 $13,950
N/A $0 $57,680 $115,360 - - - - - - -
----------------------------------------------------------------------------------------------------------------------------------
Larry E. Holdren 2/9/2007 - - - -0- 2,832 5,664 - 1,524 $28.25 $11,172
N/A $0 $56,728 $113,456 - - - - - - -
----------------------------------------------------------------------------------------------------------------------------------
(1) John W. Conlon retired as Chief Financial Officer and Treasurer on
August 1, 2006. John W. Conlon was not eligible for 2006 incentive
awards, payable in 2007, due to his retirement. Stock options granted to
Mr. Conlon on February 9, 2006, were exercisable upon the third
anniversary of the grant date. Due to John W. Conlon's retirement, these
unvested stock option grants automatically accelerated and became
exercisable in full since Mr. Conlon had completed at least 10 years of
service with Peoples and was 50 years of age or older.
(2) Donald J. Landers was appointed Chief Financial Officer and Treasurer on
August 1, 2006.
(3) Cash payment potential available for payment through the Incentive Award
Plan if the indicated level of performance was achieved during 2006.
(4) Number of stock option grants available for award through the 2002
Equity Plan if the indicated level of performance was achieved during
2005.
(5) Number of stock options granted through the 2002 Equity Plan on February
9, 2006.
OUTSTANDING EQUITY AWARDS AT YEAR-END FOR 2006
-----------------------------------------------------------------------------------------------------
Option Awards Stock Awards
-----------------------------------------------------------------------------------------------------
Equity Equity
Incentive Incentive
Plan Plan
Equity Awards: Awards:
Incentive Market Number Market or
Plan Value of Payout
Securities of Unearned Value of
Awards: Number Shares Shares, Unearned
Number of of Shares or Units Units or Shares,
Number of Number of Securites or units of Stock Other Units, or
Securities Securities Underlying of stock That Rights Other
Underlying Underlying Unexercised Option Option that Have That Have Rights That
Unexercised Unexercised Unearned Exercise Expiration Have Not Not Not Have Not
Name Options Options Options Price Date Vested Vested Vested Vested
(#) (#) (#) ($) (#) ($) (#) ($)
Exercisable Unexercisable
(3) (4)
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
--------------------------------------------------------------------------------------------------------------------------
Mark F. Bradley 1,440 - - $18.98 12/03/2007 - - - -
1,537 - - $18.70 07/23/2008 - - - -
7,687 - - $14.92 04/01/2009 - - - -
5,082 - - $13.58 04/27/2010 - - - -
1,563 - - $23.59 05/09/2012 - - - -
1,264 - - $23.59 05/09/2012 - - - -
3,707 - - $22.32 03/27/2013 - - - -
2,090 - - $22.32 03/27/2013 - - - -
459 - - $27.38 02/10/2015 - - - -
- 2,970 - $28.25 02/09/2016 - - - -
--------------------------------------------------------------------------------------------------------------------------
Donald J. Landers (2) 2,100 - - $24.06 06/30/2013 - - - -
231 - - $28.66 02/12/2014 - - - -
328 - - $27.38 02/10/2015 - - - -
- 926 - $28.25 02/09/2016 - - - -
--------------------------------------------------------------------------------------------------------------------------
Joseph S. Yazombek 7,956 - - $18.98 12/03/2007 - - - -
818 - - $18.70 07/23/2008 - - - -
7,687 - - $14.92 04/01/2009 - - - -
3,812 - - $13.58 04/27/2010 - - - -
1,928 - - $23.59 05/09/2012 - - - -
2,947 - - $23.59 05/09/2012 - - - -
3,900 - - $22.32 03/27/2013 - - - -
2,779 - - $22.32 03/27/2013 - - - -
1,215 - - $27.38 02/10/2015 - - - -
- 2,388 - $28.25 02/09/2016 - - - -
--------------------------------------------------------------------------------------------------------------------------
Carol A. Schneeberger 2,843 - - $14.92 04/01/2009 - - - -
4,765 - - $13.58 04/27/2010 - - - -
1,654 - - $23.59 05/09/2012 - - - -
1,963 - - $23.59 05/09/2012 - - - -
3,755 - - $22.32 03/27/2013 - - - -
2,279 - - $22.32 03/27/2013 - - - -
792 - - $27.38 02/10/2015 - - - -
- 1,903 - $28.25 02/09/2016 - - - -
--------------------------------------------------------------------------------------------------------------------------
Larry E. Holdren 7,956 - - $18.98 12/03/2007 - - - -
818 - - $18.70 07/23/2008 - - - -
7,687 - - $14.92 04/01/2009 - - - -
3,812 - - $13.58 04/27/2010 - - - -
1,928 - - $23.59 05/09/2012 - - - -
2,287 - - $23.59 05/09/2012 - - - -
3,900 - - $22.32 03/27/2013 - - - -
2,766 - - $22.32 03/27/2013 - - - -
587 - - $27.38 02/10/2015 - - - -
- 1,524 - $28.25 02/09/2016 - - - -
--------------------------------------------------------------------------------------------------------------------------
(1) Mr. Conlon retired as Chief Financial Officer and Treasurer on August
1, 2006.
(2) Mr. Landers was appointed Chief Financial Officer and Treasurer on
August 1, 2006.
(3) Stock option awards were granted to the named executive officers in
years prior to 2006. Vesting was accelerated on all unvested stock
option awards as of December 31, 2005.
(4) Stock option awards were granted on February 9, 2006, under the 2002
Stock Option Plan. All stock option awards vest three years from the
date of grant or February 9, 2009.
OPTION EXERCISES AND STOCK VESTED FOR 2006
-------------------------------------------------------------------------------------------------------
Option Awards Stock Awards
------------- ------------
Number of Shares Value
Number of Shares Valued Realized on Acquired on Realized
Name Acquired on Exercise Exercise Vesting on Vesting
(#) ($) (#) ($)
(a) (b) (c) (d) (e)
--------------------------------------------------------------------------------------------------------
Mark F. Bradley 1,310 $ 13,970 - -
John W. Conlon (1) 18,627 $ 164,528 - -
Donald J. Landers (2) - - - -
Joseph S. Yazombek - - - -
Carol A. Schneeberger 1,000 $ 12,815 - -
Larry E. Holdren - - - -
(1) Mr. Conlon retired as Chief Financial Officer and Treasurer on August
1, 2006.
(2) Mr. Landers was appointed Chief Financial Officer and Treasurer on
August 1, 2006.
PENSION BENEFITS FOR 2006
The table below shows the actuarial present value of accumulated
benefits payable to each of the named executive officers, including the number
of years of service credited to each named executive officer, under the
Retirement Plan determined using interest rate and mortality rate assumptions
consistent with those used in Peoples' consolidated financial statements.
Information regarding the Retirement Plan can be found on page 23.
-----------------------------------------------------------------------------------------------------------------
Number of Years
of Credited Present Value of Payments During
Name Plan Name Service Accumulated Benefit Last Fiscal Year
(#) ($) ($)
(a) (b) (c) (d) (e)
-----------------------------------------------------------------------------------------------------------------
Mark F. Bradley Peoples Bancorp Inc. 15 $58,016 -
Retirement Plan and Trust
-----------------------------------------------------------------------------------------------------------------
John W. Conlon (1) Peoples Bancorp Inc. 24 - $692,855
Retirement Plan and Trust
-----------------------------------------------------------------------------------------------------------------
Donald J. Landers (2) Peoples Bancorp Inc. 3 $9,284 -
Retirement Plan and Trust
-----------------------------------------------------------------------------------------------------------------
Joseph S. Yazombek Peoples Bancorp Inc. 23 $261,858 -
Retirement Plan and Trust
-----------------------------------------------------------------------------------------------------------------
Carol A. Schneeberger Peoples Bancorp Inc. 29 $272,614 -
Retirement Plan and Trust
-----------------------------------------------------------------------------------------------------------------
Larry E. Holdren Peoples Bancorp Inc. 24 $471,239 -
Retirement Plan and Trust
-----------------------------------------------------------------------------------------------------------------
(1) Mr. Conlon retired as Chief Financial Officer and Treasurer on August 1,
2006.
(2) Mr. Landers was appointed Chief Financial Officer and Treasurer on August
1, 2006.
NON-QUALIFIED DEFERRED COMPENSATION FOR 2006
----------------------------------------------------------------------------------------------------------------
Executive
Contributions Registrant Aggregate Aggregate Aggregate Balance
in Last Fiscal Contributions in Earnings in Withdrawals/ at Last Fiscal
Year Last Fiscal Year Last Fiscal Year Distributions Year-End
(3) (4) (5) (6)
Name ($) ($) ($) ($) ($)
(a) (b) (c) (d) (e) (f)
----------------------------------------------------------------------------------------------------------------
Mark F. Bradley - $15,000 $985 $15,273 $18,366
----------------------------------------------------------------------------------------------------------------
John W. Conlon (1) - $7,595 $1,296 $55,838 -
----------------------------------------------------------------------------------------------------------------
Donald J. Landers (2) - $4,080 $231 - $4,311
----------------------------------------------------------------------------------------------------------------
Joseph S. Yazombek $52,827 $11,798 $7,804 $17,435 $173,625
----------------------------------------------------------------------------------------------------------------
Carol A. Schneeberger - $9,400 $1,441 $15,791 $26,885
----------------------------------------------------------------------------------------------------------------
Larry E. Holdren $24,911 $7,520 $7,804 $17,391 $145,558
----------------------------------------------------------------------------------------------------------------
(1) Mr. Conlon retired as Chief Financial Officer and Treasurer on August 1,
2006.
(2) Mr. Landers was appointed Chief Financial Officer and Treasurer on August
1, 2006.
(3) Amounts in column (b) represent the voluntary elective deferral of the
named executive officer's 2006 cash incentive plus the accumulated balance
voluntarily re-deferred by the named executive officer at the end of the
mandatory three-year deferral period. Included are voluntary elective
deferral of the named executive officer's 2006 cash incentive: (a) Mr.
Yazombek - $35,393 and (b) Mr. Holdren - $7,520; plus the vested portion of
the mandatory portion of the cash incentive voluntarily re-deferred by each
named executive officer: (a) Mr. Yazombek - $17,435 and (b) Mr. Holdren -
$17,391. These amounts were previously reported in the bonus column of the
Summary Compensation Table of Peoples' Proxy Statement for the year during
which the named executive officer earned the cash incentive.
(4) Amounts in column (c) are the 25% mandatory cash incentive deferral for
each of the named executive officers for 2006. These amounts were reported
in the Summary Compensation Table of Peoples' Proxy Statement for the 2006
Annual Meeting of Shareholders and included in the 2005 Bonus column for
Mr. Bradley, Mr. Conlon, Mr. Yazombek and Ms. Schneeberger. Mr. Landers and
Mr. Holdren were not named executive officers in 2005.
(5) Amounts in column (d) represent the aggregate earnings on the accumulated
mandatory and voluntary deferred cash incentives for each of the eligible
named executives. None of these amounts are included in the Summary
Compensation Table since the rate earned was not above-market or
preferential.
(6) Amounts in column (e) represent the aggregate withdrawals or distributions
for each named executive officer from the nonqualified deferred
compensation plan, which also includes the accumulated balance voluntarily
re-deferred by the named executive officer at the end of the mandatory
three-year deferral period. Amounts voluntarily re-deferred by the named
executive officer include (a) Mr. Yazombek - $17,435 and (b) Mr. Holdren -
$17,391. The amounts listed for Mr. Bradley and Ms. Schneeberger represent
cash payments at the end of the mandatory three-year deferral period. Mr.
Conlon's amount represents the distribution of his entire deferred balance
in connection with his retirement from Peoples.
OTHER POTENTIAL POST EMPLOYMENT PAYMENTS
The amount of compensation payable to each executive officer upon
voluntary termination, early retirement, involuntary not-for-cause termination,
termination following a change of control and termination in the event of
disability or death of the executive officer is described below. The amounts
shown in the table on page 33 assume that such termination took place as of
December 31, 2006, and thus includes amounts earned through such time and are
estimates of the amounts which would be paid out to the executive officer upon
his or her termination. The actual amounts to be paid out can only be determined
at the time of an executive officer's separation from Peoples.
In the event of the retirement, disability, or death of a named
executive officer or a change in control of Peoples, the vesting period is
accelerated with regard to the mandatory portion of the non-qualified deferred
compensation plan and unvested outstanding equity-based awards.
Payments Made Upon Termination
------------------------------
Regardless of the manner in which an executive officer's employment
terminates, he or she is entitled to receive amounts earned during his or her
term of employment. Such amounts would include:
o cash incentive earned under the Incentive Award Plan during the fiscal year
less the mandatory deferral amount, if he or she is employed as of the
payment date.
o all vested equity-based awards earned through the long-term equity-based
incentive compensation programs.
o all voluntary deferrals in the Incentive Award Plan.
o the balance of the executive officer's Peoples Bancorp Retirement Savings
Plan account.
o unused vacation pay.
o amounts accrued and vested through the Peoples Bancorp Inc. Retirement Plan
and Trust.
PAYMENTS MADE UPON RETIREMENT
In the event of the retirement of an executive officer, in addition to
the items identified above, he or she would receive the following benefits:
o all previously unvested equity-based awards would vest.
o all previously unvested mandatory deferrals under the Incentive Award Plan
would vest.
PAYMENTS MADE UPON DEATH OR DISABILITY
In the event of the death or disability of an executive officer, in
addition to the benefits listed under the headings "Payments Made Upon
Termination" and "Payments Made Upon Retirement" above, the executive officer
will also receive benefits under Peoples' disability plan or payments under
Peoples' life insurance plan, as appropriate.
PAYMENTS MADE UPON A CHANGE IN CONTROL
The Compensation Committee engaged the services of Clark Consulting to
explore whether change in control agreements would be appropriate for the
executive officers of Peoples. Based upon a recommendation from Clark
Consulting, the Compensation Committee supported the development and offering of
change in control agreements for all named executive officers to promote
shareholder value and ensure an orderly, effective transition should a change in
control of Peoples occur.
The agreements were not undertaken in the belief a change in control
was imminent or expected. Peoples has entered into change in control agreements
with Mr. Bradley, Mr. Landers, Ms. Schneeberger, and Mr. Holdren.
Under the agreements, a change in control occurs when one or more of
the following events take place:
(a) Any person or entity or group of affiliated persons or entities
(other than Peoples) becomes a beneficial owner, directly or
indirectly, of 25% or more of Peoples' voting securities or all or
substantially all of the assets of Peoples;
(b) Peoples enters into a definitive agreement which contemplates the
merger, consolidation or combination of Peoples with an
unaffiliated entity in which either or both of the following is to
occur: (i) the Board of Directors of Peoples, as applicable,
immediately prior to such merger, consolidation or combination
will constitute less than a majority of the board of directors of
the surviving, new or combined entity; or (ii) less than 75% of
the outstanding voting securities of the surviving, new or
combined entity will be beneficially owned by the shareholders of
Peoples immediately prior to such merger, consolidation or
combination;
(c) Peoples enters into a definitive agreement which contemplates the
transfer of all or substantially all of Peoples' assets, other
than to a Peoples wholly-owned subsidiary;
(d) A majority of the members of the Board of Directors of Peoples
shall be persons who: (i) were not members of the Board on the
date of the applicable change in control agreement ("current
members"); and (ii) were not nominated by a vote of such Board
which included the affirmative vote of a majority of the current
members on such Board at the time of their nomination ("future
designees") and (iii) were not nominated by a vote of such Board
which included the affirmative votes of a majority of the current
members and future designees, taken as a group, on such Board at
the time of their nomination.
Generally, the agreements provide for severance compensation to those
executive officers if their employment is terminated by Peoples or its
successors for any reason other than cause (defined as gross negligence or
neglect of duties; commission of a felony or a gross misdemeanor involving moral
turpitude; fraud, disloyalty, dishonesty or willful violation of any law or
significant policy of Peoples; or issuance of an order by the banking regulators
of Peoples for removal of the executive officer) within six months prior to or
24 months after a defined change in control occurs. In addition, compensation
will be paid if the executive officer voluntarily terminates employment during
the same periods because of a decrease in the executive officer's base annual
compensation without the executive officer's consent; a material reduction in
the importance of the executive officer's job responsibilities without the
executive officer's consent, other than by reason of termination for cause or by
reason of disability, retirement, or death; geographical relocation of the
executive officer without the executive officer's consent to an office more than
50 miles from the executive officer's current location; or failure by Peoples to
obtain assumption of the agreement by its successor.
The executive officer's base annual compensation for purpose of his or
her respective change in control agreement is calculated as the average
annualized compensation paid by Peoples, prior to any deferred arrangements,
during the most recent five taxable years ending before the date of the change
in control. For executive officers that have worked for Peoples for less than
five years, the average annualized compensation paid by Peoples is calculated
for the number of years employed by Peoples. The definition covers of base
annual compensation amounts includible in compensation, prior to any deferred
arrangements, and defined as the individual's "base amount" under Section 280G
of the Internal Revenue Code. If there are payments to the executive officer
which constitute "parachute payments," as defined in Section 280G of the
Internal Revenue Code, then the payments made to the executive officer are the
greater of (x) one dollar ($1.00) less than the amount which would cause the
payments to the executive officer (including payments to the executive officer
which are not included in the agreement) subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code, and (y) any payments to the executive
officer contingent upon Peoples' change in control (including payments to the
executive officer which are not included in the agreement) less any excise tax.
Under the agreements, severance provisions include: (i) a lump sum cash
payment of two and one half times base annual compensation for Mr. Bradley and
two times base annual compensation for Ms. Schneeberger, Mr. Holdren, and Mr.
Landers, in each case payable within 30 days following the executive officer's
termination date; (ii) continuing participation in life, medical, and dental
insurance for 12 months substantially in the form and expense to the named
executive officer as that received on the date of termination; (iii) the named
executive officer agreeing not to disclose to others any confidential
information; and (iv) the named executive officer entering into a non-compete
agreement for 12 months immediately following the date of termination. In the
case of Mr. Bradley, the duration of the non-compete agreement and continuing
participation in life, medical and dental insurance is 15 months immediately
following the date of termination. The non-compete agreement prohibits the
executive officer from directly or indirectly engaging in any business in which
Peoples directly or indirectly engages within Peoples' geographic market.
The following table summarizes payments which would have been made to
the named executive officers if a termination event occurred on December 31,
2006.
--------------------------------------------------------------------------------------------------------------------------
CIC
Involuntary Involuntary
Not for or Good
Volunatary Early Normal Cause For Cause Reason Death or
Termination Retirement Retirement Termination Termination Termination Disability
(1)
(a) (b) (c) (d) (e) (f) (g) (h)
--------------------------------------------------------------------------------------------------------------------------
Mark F. Bradley
--------------------------------------------------------------------------------------------------------------------------
2.5 times Base Annual Compensation - - - - - $390,254 -
--------------------------------------------------------------------------------------------------------------------------
Welfare (2) - - - - - $15,192 -
--------------------------------------------------------------------------------------------------------------------------
Deferred Compensation Plan - - $18,366 - - $18,366 $18,366
--------------------------------------------------------------------------------------------------------------------------
Intrinsic Value of Unvested Stock - - $4,307 - - $4,307 $4,307
Options
--------------------------------------------------------------------------------------------------------------------------
Total: $0 $0 $22,673 $0 $0 $428,119 $22,673
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Donald J. Landers
--------------------------------------------------------------------------------------------------------------------------
2 times Base Annual Compensation - - - - - $213,588 -
--------------------------------------------------------------------------------------------------------------------------
Welfare (2) - - - - - $10,529 -
--------------------------------------------------------------------------------------------------------------------------
Deferred Compensation Plan - - $4,311 - - $4,311 $4,311
--------------------------------------------------------------------------------------------------------------------------
Intrinsic Value of Unvested Stock - - $3,463 - - $3,463 $3,463
Options
--------------------------------------------------------------------------------------------------------------------------
Total: $0 $0 $7,774 $0 $0 $231,891 $7,774
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Joseph S. Yazombek
--------------------------------------------------------------------------------------------------------------------------
Deferred Compensation Plan - $18,975 $18,975 - - $18,975 $18,975
--------------------------------------------------------------------------------------------------------------------------
Intrinsic Value of Unvested Stock - $1,343 $1,343 - - $1,343 $1,343
Options
--------------------------------------------------------------------------------------------------------------------------
Total: $0 $20,318 $20,318 $0 $0 $20,318 $20,318
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Carol A. Schneeberger
--------------------------------------------------------------------------------------------------------------------------
2 times Base Annual Compensation - - - - - $369,757 -
--------------------------------------------------------------------------------------------------------------------------
Welfare (2) - - - - - $5,247 -
--------------------------------------------------------------------------------------------------------------------------
Deferred Compensation Plan - $14,171 $14,171 - - $14,171 $14,171
--------------------------------------------------------------------------------------------------------------------------
Intrinsic Value of Unvested Stock - $2,759 $2,759 - - $2,759 $2,759
Options
--------------------------------------------------------------------------------------------------------------------------
Total: $0 $16,930 $16,930 $0 $0 $391,934 $16,930
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Larry E. Holdren
--------------------------------------------------------------------------------------------------------------------------
2 times Base Annual Compensation - - - - - $418,353 -
--------------------------------------------------------------------------------------------------------------------------
Welfare (2) - - - - - $10,368 -
--------------------------------------------------------------------------------------------------------------------------
Deferred Compensation Plan - $11,085 $11,085 - - $11,085 $11,085
--------------------------------------------------------------------------------------------------------------------------
Intrinsic Value of Unvested Stock - $2,210 $2,210 - - $2,210 $2,210
Options
--------------------------------------------------------------------------------------------------------------------------
Total: $0 $13,295 $13,295 $0 $0 $442,016 $13,295
--------------------------------------------------------------------------------------------------------------------------
(1) Messrs. Yazombek and Holdren and Ms. Schneeberger were eligible to
receive the unvested mandatory deferral balance earned through the
Incentive Award Plan and were also eligible to exercise all unvested
stock options, if they elected to retire as of December 31, 2006, as
they had reached retirement eligibility (50 years of age or older
and had at least 10 years of service with Peoples as of the December
31, 2006). Vesting of the mandatory deferral balance and unvested
stock options accelerates upon retirement.
(2) Under the terms of the change in control agreements, the named
executive officer continues to participate in life, medical, and
dental insurance during the term of his or her non-compete
agreement.
DIRECTOR COMPENSATION
Peoples uses a combination of cash and equity-based compensation to
attract and retain qualified directors to serve on the Board of Directors.
Cash Compensation Paid to Board Members
---------------------------------------
In determining the overall competitiveness of director compensation,
the Compensation Committee reviewed director compensation data from the
previously mentioned Peer Group.
Peoples' directors, other than Mark F. Bradley, receive a quarterly
cash fee for their services. Effective May 1, 2006, the amount of this quarterly
fee was increased from $1,000 to $1,500 per quarter. In addition, directors,
other than Mark F. Bradley, are compensated for each meeting of the Board of
Directors attended. Effective May 1, 2006, this fee was increased from $1,000 to
$1,250 per Board meeting attended. The fees were increased to bring them in line
with the Peer Group average and are necessary to maintain the caliber of
directors necessary to promote long-term shareholder value.
Directors are also compensated for each committee meeting they attend.
Members of the Executive Committee and the Governance and Nominating Committee
received during 2006 and continue to receive $100 for each committee meeting
attended lasting less than 30 minutes attended and $200 for each committee
meeting attended of 30 minutes or more. Directors were paid during 2006 and
continue to be paid $500 per meeting for attending Compensation Committee
meetings of 30 minutes or longer while the fee for attending meetings of less
than 30 minutes is $100 per meeting. The fee for attending Audit Committee
meetings of 30 minutes or longer was and remains $500 per meeting and $100 per
meeting attended if the meeting lasts less than 30 minutes.
The Chairperson of the Compensation Committee receives an additional
cash fee of $750 per quarter. The fee is competitive with the Peer Group average
and remained unchanged. Likewise, the Chairperson of the Audit Committee
receives an additional cash fee of $1,250 per quarter that is competitively in
line with the Peer Group average. Peoples believes that the additional fees are
appropriate and commensurate with the overall level of responsibility and
accountability of each Chairperson. Likewise, the fees are necessary to attract
and retain Committee Chairpersons with the talents and skills necessary to
promote shareholder value.
Each director of Peoples, other than Mark F. Bradley, who also serves
as a director of Peoples Bank receives $600 per quarter and $500 for each
regular monthly meeting attended. Additionally, each director of Peoples who
also serves as a Peoples Bank committee member receives $100 for each committee
meeting attended of less than 30 minutes attended and $200 for each committee
meeting attended of 30 minutes or more.
Mark F. Bradley received no compensation as a director of Peoples or
Peoples Bank during 2006 continues to receive none in this capacity.
Thomas J. Wolf also received and continues to receive $150 for each
meeting of the Peoples Bank Kentucky/ Huntington Leadership Advisory Board he
attends, in addition to the previously mentioned fees for his service to
Peoples.
Directors who travel a distance of 50 miles or more to attend a Board
or committee meeting of Peoples or Peoples Bank receive a $50 travel fee. A
single travel fee of $50 is paid for multiple meetings occurring on the same
day. Directors who stay overnight to attend a meeting are reimbursed for the
actual cost of their overnight accommodations. Peoples believes these fees are
reasonable and partially offset travel expenses incurred by some of the
directors living outside the Marietta, Ohio area, where Board of Directors and
committee meetings are typically held.
In years prior to 2005, Mark F. Bradley was paid a fee as an employee
director. Mark F. Bradley elected to place the fees paid to him in the Deferred
Compensation Plan for Directors to be invested in common shares of Peoples.
Under the Deferred Compensation Plan for Directors, dividends are credited on
common shares accrued. The dividends are converted into a Peoples' common share
equivalent based on the fair market value of a common share on a fixed quarterly
cycle.
Equity-based Compensation
-------------------------
On May 11, 2006, the Board of Directors granted each of the individuals
then serving as a non-employee director of Peoples a non-qualified stock option
to purchase 1,200 common shares of Peoples at an exercise price of $29.12 per
share. The non-employee directors who received the non-qualified stock option
grant were: Carl L. Baker, Jr.; George W. Broughton; Frank L. Christy; Wilford
D. Dimit; Richard Ferguson; Robert W. Price; Theodore P. Sauber; Paul T.
Theisen; Joseph H. Wesel; and Thomas J. Wolf. On the same day, the Board of
Directors of Peoples also granted a non-qualified stock option to purchase 600
common shares to each of those non-employee directors of Peoples Bank who were
not also a director of Peoples.
The non-qualified stock options were granted under the provisions of
the Peoples 2006 Equity Plan, which was approved by the shareholders at the 2006
Annual Meeting of Shareholders held on April 13, 2006. Each non-qualified stock
option became fully vested and exercisable on November 11, 2006 and has a
ten-year term. The non-qualified stock options are designed to strengthen the
long-term interests of the directors and align them with the long-term interests
of the shareholders of Peoples.
The following summarizes the effect of various termination of service
events on the non-qualified stock options granted to the Non-Employee Directors:
o TERMINATION OF SERVICE AS A DIRECTOR OF PEOPLES DUE TO DEATH,
DISABILITY OR RETIREMENT: The non-qualified stock option will
become fully vested and exercisable.
o TERMINATION OF SERVICE AS A DIRECTOR OF PEOPLES DUE TO ANY
REASON OTHER THAN DEATH, DISABILITY OR RETIREMENT: If unvested
on the date of termination, the non-qualified stock option
will immediately terminate and be of no further force and
effect.
o TERMINATION OF SERVICE AS A DIRECTOR OF PEOPLES FOR ANY REASON
OTHER THAN DEATH, DISABILITY, DISCHARGE FOR CAUSE OR
RETIREMENT: The exercisable portion of the non-qualified stock
option may be exercised at any time before the earlier to
occur of (a) three months after such termination of service
and (b) 10 years from grant date.
o TERMINATION OF SERVICE AS A DIRECTOR OF PEOPLES FOR CAUSE: The
non-qualified stock option, whether or not then exercisable,
will expire and any rights there under will terminate
immediately.
o TERMINATION OF SERVICE AS A DIRECTOR OF PEOPLES DUE TO DEATH:
The non-qualified stock option may be exercised by the
Non-Employee Director's personal representative at any time
before the earlier to occur of (a) one year after the
Non-Employee Director's death and (b) 10 years from grant
date.
o TERMINATION OF SERVICE AS A DIRECTOR OF PEOPLES DUE TO
DISABILITY OR RETIREMENT: The non-qualified stock option may
be exercised by the Non-Employee Director at any time before
the earlier to occur of (a) one year after the date of
termination of service and (b) 10 years from grant date.
The full Board of Directors approves all equity-based awards made to
non-employee directors. The grant date for equity-based awards made to
non-employee directors of Peoples or Peoples Bank is the date of the approval by
the Board or the Compensation Committee, as appropriate, the date of election or
appointment, or the first future date after which all material information has
been publicly disclosed, whichever is later. The grant price is the closing
price on the grant date of Peoples' common shares on The NASDAQ Stock Market.
On February 8, 2007, the Board of Directors of Peoples approved the
grant of 300 restricted common shares of Peoples to each of the non-employee
directors, if still a director, on February 13, 2007. The non-employee directors
who received the restricted common share grant were: Carl L. Baker, Jr.; George
W. Broughton; Frank L. Christy; Wilford D. Dimit; Richard Ferguson; David L.
Mead; Robert W. Price; Theodore P. Sauber; Paul T. Theisen; Joseph H. Wesel; and
Thomas J. Wolf. On the same day, the Board of Directors of Peoples also granted
150 restricted common shares of Peoples to those non-employee directors of
Peoples Bank who were not also directors of Peoples. The restrictions on the
restricted common shares lapse after a period of six months.
Deferred Compensation Plan for Non-Employee Directors
-----------------------------------------------------
Since 1991, Peoples has maintained the Deferred Compensation Plan for
Directors. Voluntary participation in the Deferred Compensation Plan for
Directors allows a non-employee director of Peoples, or one of its subsidiaries,
to defer all or part of his or her director's fees, including the federal income
tax thereon. Since January 2, 1998, directors have been permitted to allocate
their deferrals between a cash account (earning interest equal to Peoples Bank's
three-year CD interest rate) and a stock account (under which common shares of
Peoples are accrued at fair market value on a fixed monthly cycle based on the
amount deferred and the fair market value of a common share on the date the
dividends are credited). The only right a participant in the Deferred
Compensation Plan for Directors has with respect to his or her cash account
and/or stock account is to receive distributions upon retirement as a director.
Distribution of the deferred amounts is made in a lump sum or annual
installments, at the election of the director, beginning in the first year in
which the person is no longer a director. The stock account is distributed only
in common shares of Peoples and the cash account is distributed only in cash.
All Other Compensation
----------------------
The non-employee directors are also eligible to participate in selected
employee benefit programs maintained by Peoples. These include medical and
dental insurance plans and Group Term Life insurance. The non-employee directors
pay the same premiums for the medical and dental insurance as do employees who
participate in such plans. During 2006, Mr. Theisen participated in the medical
and dental insurance plans. The non-employee directors automatically receive a
Group Term Life insurance benefit, the premiums for which are paid by Peoples.
The maximum benefit is $50,000 for directors age 65 or younger. The maximum
benefit decreases by a percentage for each year beyond age 65 until it reaches a
maximum payout of $5,000.
DIRECTOR COMPENSATION FOR 2006
----------------------------------------------------------------------------------------------------------------
Change in
Fees Pension Value
Earned or and
Paid in Nonqualified
Cash Non-Equity Deferred
or Paid Stock Option Incentive Plan Compensation All Other
Name in Cash Awards Awards Compensation Earnings Compensation Total
(3) (4) (5) (6)
($) ($) ($) ($) ($) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h)
----------------------------------------------------------------------------------------------------------------
Carl L. Baker $24,750 - $8,944 - $205 $126 $33,899
----------------------------------------------------------------------------------------------------------------
Mark F. Bradley (1) - - - - $1,163 - -
----------------------------------------------------------------------------------------------------------------
George W. Broughton $45,600 - $8,944 - $1,017 $126 $55,561
----------------------------------------------------------------------------------------------------------------
Frank L. Christy $26,000 - $8,944 - - $126 $34,944
----------------------------------------------------------------------------------------------------------------
Wilford D. Dimit $40,700 - $8,944 - $15,376 $50 $65,020
----------------------------------------------------------------------------------------------------------------
Richard Ferguson $26,400 - $8,944 - $894 $126 $36,238
----------------------------------------------------------------------------------------------------------------
David L. Mead (2) $21,700 - $4,472 - $138 $126 $26,310
----------------------------------------------------------------------------------------------------------------
Robert W. Price $22,050 - $8,944 - $2,552 $126 $33,546
----------------------------------------------------------------------------------------------------------------
Theodore P. Sauber $37,900 - $8,944 - - $50 $46,844
----------------------------------------------------------------------------------------------------------------
Paul T. Theisen $40,450 - $8,944 - $4,601 $14,603 $68,560
----------------------------------------------------------------------------------------------------------------
Joseph H. Wesel $36,700 - $8,944 - $7,221 $38 $52,865
----------------------------------------------------------------------------------------------------------------
Thomas J. Wolf $22,450 - $8,944 - - $126 $31,394
----------------------------------------------------------------------------------------------------------------
(1) Mark F. Bradley, a member of the Board of Directors of both Peoples and
Peoples Bank, receives no compensation for serving on either board.
(2) David L. Mead became a member of the Board of Directors of Peoples on
September 14, 2006 and a member of the Compensation Committee on
October 12, 2006.
(3) Amounts in column (b) represent the aggregate quarterly and meeting
fees (including travel fees paid or payable to each director). Included
in these amounts are voluntary elective deferrals of fees pursuant to
Peoples' Deferred Director Compensation Plan. Deferrals of these fees
for 2006 were: (a) Wilford D. Dimit - $40,700; (b) Richard Ferguson -
$25,750; (c) David L. Mead - $9,900; and (d) Robert W. Price - $21,550.
All other amounts representing quarterly and meeting fees were paid in
cash.
(4) The amounts in column (d) reflect the dollar amount recognized for
financial statement reporting purposes for 2006, in accordance with FAS
123(R) of awards pursuant to Peoples' 2006 Equity Plan. Assumptions
used in the calculation of these amounts are included in the "Notes To
The Consolidated Financial Statements, Note 16, Stock-Based
Compensation on pages 72 through 74 of Peoples' Annual Report on Form
10-K for the Fiscal Year Ended December 31, 2006." All non-employee
directors were awarded non-qualified stock options covering 1,200
common shares, except for Mr. Mead, who received non-qualified stock
options covering 600 common shares in his capacity as a director of
Peoples Bank prior to being elected to the board of Peoples. The
aggregate number of common shares underlying non-qualified stock
options outstanding at December 31, 2006 for each non-employee director
were: (a) Carl L. Baker, Jr. - 7,984; (b) George W. Broughton - 4,665;
(c) Frank L. Christy - 7,295; (d) Wilford D. Dimit - 12,210; (e)
Richard Ferguson - 2,355; (f) David L. Mead - 600; (g) Robert W. Price
- 5,820; (h) Theodore P. Sauber - 2,355; (i) Paul T. Theisen - 12,711;
(j) Joseph H. Wesel - 12,348; and (k) Thomas J. Wolf - 3,510. All of
these outstanding options were vested at December 31, 2006. The amount
in column (d) also represents the grant date fair value of the
non-qualified stock option awards calculated in accordance with FAS
123(R).
(5) The amounts in column (f) represent 2006 earnings on each of the
director's deferred fees. For 2006 Mark F. Bradley's earned amount
represents dividends credited on the cumulative amount of director's
fees deferred in prior years under the terms of the Deferred
Compensation Plan for Directors. Mark F. Bradley has not been paid a
fee for his services as a director of Peoples and Peoples Bank since
December 31, 2004.
(6) Represents the amount of Peoples' 2006 annual contribution of premiums
for group term life insurance for all directors except Paul T. Theisen,
who also participated in Peoples' medical and dental insurance plan.
Paul T. Theisen's group term life premium was $38 and his medical and
dental premium was $14,565.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Each of Carl L. Baker, Jr., George W. Broughton, Frank L. Christy, Paul
T. Theisen, and Robert W. Price served as a member of the Compensation Committee
of Peoples' Board of Directors for the entire 2006 fiscal year. David L. Mead
has served on the Compensation Committee since October 12, 2006. None of the
individuals serving on the Compensation Committee has been an officer or
employee of Peoples or any of our subsidiaries. During the 2006 fiscal year,
Peoples Bank entered into lending relationship with certain members of the
Compensation Committee, with members of their respective families and with
corporations and organizations as to which they serve as executive officers or
beneficially own more than 100% of the equity securities. All such loans were
made in the ordinary course of business, were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable loans with persons not related to Peoples or Peoples Bank, and
did not involve more than the normal risk of collectibility or present other
unfavorable features to Peoples or Peoples Bank. No executive officer of Peoples
has served on the board of directors or compensation committee (or other
committee serving an equivalent function) of any other entity, one of whose
executive officers served on Peoples' Board of Directors or Compensation
Committee.
While Paul T. Theisen is Of Counsel to, and an independent contractor
with, the law firm of TheisenBrock, Mr. Theisen has not been a partner,
controlling shareholder or executive officer or otherwise been related to or
held any interest in TheisenBrock, other than as Of Counsel and an independent
contractor (and has not individually performed services for Peoples or any of
our subsidiaries), since 1998.
AUDIT COMMITTEE REPORT
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006
Management has represented to the Audit Committee that Peoples' audited
consolidated financial statements as of and for the fiscal year ended December
31, 2006 were prepared in accordance with US GAAP and the Audit Committee has
reviewed and discussed the audited consolidated financial statements with
management.
The Audit Committee discussed and reviewed with Ernst & Young LLP
("E&Y") all communications and other matters required to be discussed by the
standards of the Public Company Accounting Oversight Board (United States),
including those described in Statement on Auditing Standards No. 61, as amended,
as adopted by the Public Company Accounting Oversight Board in Rule 3200T, and
by SEC rules, as well as significant current accounting developments and issues.
The Audit Committee has received from E&Y the written disclosures and
the letter describing all relationships between E&Y and Peoples and our
subsidiaries that might bear on E&Y's independence consistent with Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees),
as adopted by the Public Company Accounting Oversight Board in Rule 3600T;
discussed with E&Y any relationships with or services to Peoples or our
subsidiaries that may impact E&Y's independence and objectivity, including the
non-audit services rendered by E&Y, and satisfied itself as to E&Y's
independence.
Based on the Audit Committee's discussions with management and E&Y, and
the Audit Committee's review of the report of E&Y to the Audit Committee, the
Audit Committee recommended to the Board of Directors that the audited
consolidated financial statements be included in Peoples' Annual Report on Form
10-K for the Fiscal Year Ended December 31, 2006 for filing with the SEC.
Submitted by the Audit Committee of Peoples' Board of Directors:
Richard Ferguson (Chairman); Carl L. Baker, Jr.; George W. Broughton; Theodore
P. Sauber; and Thomas J. Wolf, Members.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
While Peoples is not currently considering the appointment of any
independent registered public accounting firm other than E&Y, the Audit
Committee has not yet made an appointment of its independent registered public
accounting firm for the 2007 fiscal year. The Audit Committee intends to appoint
an independent registered public accounting firm as soon as practicable. E&Y has
served as Peoples' independent auditors/independent registered public accounting
firm since 1995. The Board of Directors expects that representatives of E&Y will
be present at the Annual Meeting. They will have the opportunity to make a
statement if they desire to do so, and will be available to respond to
appropriate questions.
Fees
----
Fees for services rendered by E&Y for each of the 2006 fiscal year and
the 2005 fiscal year were:
2006 2005
---------- -----------
Audit Fees (1) $615,494 $698,887
Audit-Related Fees (2) 23,551 -
Tax Fees (3) 61,883 41,848
---------- -----------
Total $700,928 $740,735
---------- ===========
--------------------
(1) Audit Fees also included internal control testing for compliance with
Section 404 of the Sarbanes-Oxley Act of 2002. (2) Audit-Related Fees included
services pertaining to statutory audits and accounting consultation. (3) Tax
Fees included services for tax planning and advice, tax compliance, assistance
with tax audits and appeals.
E&Y did not render any other services during the 2006 fiscal year or
the 2005 fiscal year. None of the services described under Audit-Related Fees or
Tax Fees above were approved by the Audit Committee pursuant to the waiver
procedure set forth in 17 CFR 210.2-01(c)(7)(i)(C).
Pre-Approval Policy
-------------------
The Audit Committee has adopted, and the Board of Directors has
ratified, an Audit and Non-Audit Services Pre-Approval Policy (the "Pre-Approval
Policy"), which sets forth the procedures and conditions pursuant to which
services proposed to be performed by the independent registered public
accounting firm may be pre-approved. Proposed services may either be
pre-approved without consideration of specific case-by-case services by the
Audit Committee ("general pre-approval"), or require the specific pre-approval
of the Audit Committee ("specific pre-approval"). Appendices to the Pre-Approval
Policy describe the Audit, Audit-Related, Tax and All Other services that have
the general pre-approval of the Audit Committee. The term of any general
pre-approval is 12 months from the date of pre-approval, unless the Audit
Committee states otherwise. The Audit Committee will annually review and
pre-approve the services that may be provided by the independent registered
public accounting firm without obtaining specific pre-approval from the Audit
Committee. The Audit Committee will add to or subtract from the list of general
pre-approved services from time to time, based on subsequent determinations.
The Pre-Approval Policy does not delegate to management the Audit
Committee's responsibilities to pre-approve services performed by the
independent registered public accounting firm. The Audit Committee may delegate
pre-approval authority to one or more of its members. The member(s) to whom such
authority is delegated must report, for informational purposes only, any
pre-approval decisions to the Audit Committee at its next scheduled meeting.
All requests or applications for services to be provided by the
independent registered public accounting firm will be submitted to the Chief
Financial Officer of Peoples, and must include a detailed description of the
services to be rendered. The Chief Financial Officer will determine whether such
services are included within the list of services that have received the general
pre-approval of the Audit Committee. The Audit Committee will be informed on a
timely basis of any such services rendered by the independent registered public
accounting firm. Services that require specific pre-approval by the Audit
Committee will be submitted to the Audit Committee by both the independent
registered public accounting firm and the Chief Financial Officer, and must
include a joint statement as to whether, in their view, the request or
application is consistent with the SEC's rules on auditor independence. Any
proposed services exceeding pre-approved cost levels or budgeted amounts will
also require specific pre-approval by the Audit Committee.
The Audit Committee has designated the head internal auditor of Peoples
to monitor the performance of all services provided by the independent
registered public accounting firm and to determine whether such services are in
compliance with the Pre-Approval Policy. The head internal auditor will report
to the Audit Committee on a periodic basis on the results of this monitoring.
Both the head internal auditor and management will immediately report to the
Chairman of the Audit Committee any breach of the Pre-Approval Policy that comes
to the attention of the head internal auditor or any member of management.
The Audit Committee will also review the head internal auditor's annual
internal audit plan to determine whether the plan provides for adequate
monitoring of the independent registered public accounting firm's services.
HOUSEHOLDING OF ANNUAL MEETING MATERIALS
The SEC has implemented rules regarding the delivery of proxy materials
(i.e., annual reports and proxy statements, proxy statements combined with a
prospectus, or any information statements provided to shareholders) to
households. This method of delivery, often referred to as "householding," would
permit Peoples to send a single annual report and/or a single proxy statement to
any household at which two or more different shareholders reside if Peoples
reasonably believes such shareholders are members of the same family or
otherwise share the same address or that one shareholder has multiple accounts.
In each case, the shareholder(s) must consent to the householding process. Each
shareholder would continue to receive a separate notice of any meeting of
shareholders and proxy card. The householding procedure is intended to reduce
the volume of duplicate information shareholders receive and reduce Peoples'
expenses. Peoples may institute householding in the future and will notify
registered shareholders affected by householding at that time.
Many broker/dealers and other holders of record have instituted
householding. If your family has one or more "street name" accounts under which
you beneficially own common shares of Peoples, you may have received
householding information from your broker/dealer, financial institution, or
other nominee in the past. Please contact the holder of record directly if you
have questions, require additional copies of this proxy statement or Peoples'
2006 Annual Report or if you wish to revoke your decision to household and
thereby receive multiple copies. You should also contact the holder of record if
you wish to institute householding. These options are available to you at any
time.
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors knows of
no matter that will be presented for action by the shareholders at the Annual
Meeting other than those matters discussed in this proxy statement. However, if
any other matter requiring a vote of the shareholders is properly presented at
the Annual Meeting or any adjournment thereof, the individuals acting under the
proxies solicited by the Board of Directors will vote and act according to their
best judgments in light of the conditions then prevailing, to the extent
permitted under applicable law.
It is important that your proxy card be completed and returned
promptly. If you do not expect to attend the Annual Meeting in person, please
complete, sign and return the enclosed proxy card in the self-addressed envelope
furnished herewith.
By Order of the Board of Directors,
/s/ MARK F. BRADLEY
Mark F. Bradley
President and Chief Executive Officer
PEOPLES BANCORP INC.
ANNUAL MEETING OF SHAREHOLDERS
Thursday, April 12, 2007
10:00 a.m. Eastern Daylight Savings Time
Holiday Inn
701 Pike Street
Marietta, Ohio 45750
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Peoples Bancorp Inc.
[PEOPLES BANCORP LOGO] P.O. Box 738
Marietta, Ohio 45750 proxy
______________________________________________________________________________
This proxy is solicited by the Board of Directors for use at the Annual Meeting
of Shareholders to be held on April 12, 2007.
The common shares of Peoples Bancorp Inc. ("Peoples") as to which you have
voting authority, including those held on your behalf in a trust account, under
Peoples' Dividend Reinvestment Plan or under Peoples' Retirement Savings Plan,
will be voted as you specify on the reverse side of this proxy card.
If no choice is specified, the common shares of Peoples represented by this
proxy card will be voted "FOR" the election of the directors listed in Item 1.
By signing this proxy card, you revoke all prior proxies to vote the common
shares of Peoples your are entitled to vote at the Annual Meeting of
Shareholders and appoint Mark F. Bradley and Joseph H. Wesel, and each of them
with full power of substitution, as your proxies to attend the Annual Meeting of
Shareholders and vote your common shares of Peoples on the matter shown on the
reverse side and in their discretion, to the extent permitted by applicable law,
on any other matters (none known at the time of solicitation of this proxy)
which may properly come before the Annual Meeting of Shareholders and all
adjournments thereof.
See reverse for voting instructions.
-------------------------------------------------------------------------
The Board of Directors Recommends a Vote FOR All Director Nominees
Listed in Item 1.
1. Election of directors for a three-year term expiring in 2010:
01 David L. Mead 03 Paul T. Theisen
02 Robert W. Price 04 Thomas J. Wolf
[ ] Vote FOR all nominees [ ] Vote WITHHELD
(except as marked) from all nominees
(Instructions: To withhold authority to vote for any --------------------
indicated nominee(s), write the number(s) of the | |
nominee(s) in the box provided to the right.) | |
--------------------
THE COMMON SHARES REPRESENTED BY THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL
BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR THE
ELECTION OF ALL DIRECTOR NOMINEES LISTED IN ITEM 1. IF ANY OTHER MATTERS ARE
PROPERLY BROUGHT BEFORE THE ANNUAL MEETING OF SHAREHOLDERS OR ANY ADJOURNMENT
THEREOF OR IF A NOMINEE FOR ELECTION AS A DIRECTOR NAMED IN THE PROXY
STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS IS UNABLE TO SERVE OR FOR
GOOD CAUSE WILL NOT SERVE, THE COMMON SHARES PREPRESENTED BY THIS PROXY CARD
WILL BE VOTED IN THE DISCRETION OF THE INDIVIDUAL DESIGNATED TO VOTE THIS PROXY,
TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON SUCH MATTERS OR FOR SUCH
SUBSTITUTE NOMINEE(S) AS THE DIRECTOR MAY RECOMMEND.
Address Change? Mark Box [ ] Indicate changes below:
Date
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Signature(s) in Box
Please sign exactly as your name(s) appears on
the proxy card. If held in joint tenancy, all
persons must sign. Trustees, administrators,
executors, guardians, attorneys, agents etc.,
must include title and authority. Corporations
must provide full name of corporation and title
of authorized officer signing the proxy card.